Amidst escalating fuel shortages triggered by military conflicts and an intensifying American naval blockade, the Iranian government is set to raise petrol prices for consumption exceeding the rationed quota. This unpopular measure carries the risk of further accelerating inflation in an economy already grappling with soaring prices.
Iran, which heavily subsidizes fuel and boasts some of the cheapest petrol globally, has maintained its monthly ration of 110 liters per driver, priced at 30,000 rials per liter for the quota portion. However, government spokesperson Fatemeh Mohajerani announced that from Tuesday, the price for any petrol purchased beyond this quota will double, jumping from 50,000 rials to 100,000 rials per liter. Mohajerani justified the hike as a necessary response to "rising consumption and supply-demand imbalance," adding that all revenue generated would be directed toward supporting public welfare.
Despite possessing vast oil and gas reserves, Iran has had to rely on petrol imports in recent years due to limited domestic refining capacity, a deteriorating public transport network, and excessive consumption from a large fleet of inefficient vehicles. The situation has deteriorated sharply since the outbreak of the US-Israeli conflict in February, which saw attacks on oil and petrochemical infrastructure reduce Iran's refining output, and a US blockade of southern ports since April that has hindered fuel imports, forcing the government to draw down its strategic reserves.
President Masoud Pezeshkian has repeatedly warned that the current subsidized pricing is unsustainable and burdens the economy. Yet, many Iranians view cheap energy as an entitlement; a sudden overnight price hike in 2019 sparked nationwide protests that turned deadly. With the annual inflation rate currently approaching 90% and the national currency at a record low, trading at over 22 million rials to the dollar, economists caution that this price adjustment will trigger ripple effects across the prices of goods and services.
Mohammad Sadegh Azimifar, head of Iran's state-owned National Iranian Oil Products Distribution Company, highlighted that domestic petrol production has recently reached an all-time high, but the country still faces a daily supply gap of 10 million liters. "Eighty-five percent of the population will not be affected by this price change," he stated. "The increase only applies to consumption that exceeds normal standards."
The move comes as Washington and Tehran remain locked in a standoff over the Strait of Hormuz. In the past month, the US has shifted strategy, prioritizing economic pressure to isolate Iran, expanding secondary sanctions on its trading partners, and threatening further punitive actions. For decades, however, Tehran has worked to build what it calls a "resistance economy," designed to withstand sanctions even if it means deepening economic hardship for its 90 million citizens.
Iran's top security official, Mohsen Rezaei, asserted on state television that Iran continues to receive oil revenues despite the naval blockade, a likely reference to floating storage facilities outside the blockade zone. These were reportedly used to export crude during a brief window of relaxed US restrictions following a short-lived agreement in June. "We currently sell about 1.5 million barrels of oil per day and are able to receive payments," Rezaei claimed. "Who says Iran's oil exports have stalled or that its foreign reserves have dried up?"
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