Iran Doubles Non-Subsidized Gasoline Prices Amid Worsening Fuel Crisis

The Iranian government will double the price of non-subsidized gasoline starting Tuesday, a move that highlights the deepening crisis in the country's fuel sector. The price of gasoline purchased beyond the subsidized quotas will rise from 5,000 to 10,000 tomans per liter. Even after this doubling, the new price is equivalent to only about 4.4 cents per liter based on the free-market exchange rate of the US dollar.

This step is being implemented with extreme caution, as the Iranian leadership is acutely aware of the high social sensitivity surrounding fuel prices. Under the current system, which remains unchanged, Iranian drivers will continue to receive a monthly quota of 60 liters at a highly subsidized price of 1,500 tomans per liter (about 0.7 cents) and an additional 50 liters at 3,000 tomans per liter (about 1.3 cents). Only fuel purchased beyond these quotas, or using the gas station's service card, will be subject to the new rate of 10,000 tomans. The government explicitly announced that the two subsidized quotas will remain untouched. In dollar terms, the total cost of the 110 liters included in the monthly subsidized quotas is just $1.06, and filling up an additional 50 liters at the highest rate will cost around $2.20.

Structural Deficit and Supply Pressures

Behind these exceptionally low prices lies a worsening structural crisis. Despite being one of the world's largest oil producers, Iran consumes massive amounts of gasoline due to artificially low prices, an aging vehicle fleet, and inadequate public transportation. According to the National Iranian Oil Products Distribution Company, average consumption stood at approximately 124 million liters per day at the beginning of the Iranian year, spiking even higher during the summer. Industry officials have reported a significant gap between domestic demand and local refining capacity.

Recent geopolitical tensions and import difficulties have exacerbated the shortage. Reports from recent weeks indicate that Iran is facing a daily deficit of millions of liters of gasoline, following damage to some of its refining infrastructure and growing difficulties in securing imports to cover the shortfall. For the government, continuing to supply virtually unlimited fuel at these heavily subsidized rates has become an unsustainable fiscal burden.

The Shadow of the 2019 Protests

Fuel pricing remains an explosive political issue in Iran. In November 2019, a sudden hike in gasoline prices triggered widespread protests and violent clashes across the country. The memory of those events heavily influences how the government of President Masoud Pezeshkian is managing the current adjustment. By keeping the two primary subsidized quotas intact and only targeting excess consumption, the administration hopes to mitigate public anger.

Government spokesperson Fatemeh Mohajerani framed the decision as a measure to manage fuel consumption and ensure supply stability, promising that the additional revenues would be directed toward public welfare assistance. State-aligned economic media have also argued that the current subsidy system disproportionately benefits wealthier households with multiple vehicles over poorer families who do not own cars.

Ultimately, the public and local media understand that even at 10,000 tomans per liter, the price does not reflect the actual economic cost of production. The move is widely seen as a trial balloon by the cash-strapped government to test how far it can scale back subsidies without triggering civil unrest. For President Pezeshkian, this is a critical political test: if the hike passes without major protests, it could pave the way for further subsidy cuts; if it meets fierce resistance, it will serve as a stark reminder that fuel prices remain one of the most volatile red lines in Iranian politics.