Iran adds new gasoline price tier starting in December

TEHRAN, Iran (AP) – Iran will introduce a new gasoline price tier on Dec. 6, raising the cost of fuel purchased beyond monthly quotas to 50,000 rials (about 4 cents on the Iranian exchange market) per liter, officials said, in a shift that adds a third pricing level to the country’s long-running subsidy system.

Under the revised structure, motorists will continue to receive 60 liters per month at the subsidized rate of 15,000 rials. A second tier of 100 liters will remain available for 30,000 rials.

Any consumption beyond those limits will now be charged at 50,000 rials – a price that until recently was available only through unofficial station cards kept by fuel-pump attendants.

For years, many drivers relied on those spare cards after exhausting their own monthly allocation, paying the 30,000-rial rate. But station operators say the government has raised the price on those cards to 50,000 rials ahead of the formal rollout.

Authorities also announced that gasoline pricing will be reviewed every three months, at the start of each season, allowing the government to adjust rates quarterly. Officials said the measure is aimed at curbing excessive consumption and easing pressure on state finances.

Under the new rules, individuals who own more than one vehicle will receive a fuel card for only one of them. Newly manufactured cars delivered to buyers will no longer come with a gasoline quota.

The shift marks the most significant change to Iran’s fuel-subsidy system since 2019, when a sudden 50% jump in subsidized prices – and a 300% increase in the rate for purchases beyond quota – sparked nationwide protests.

Gasoline rationing was first introduced in 2007, with authorities promising at the time that savings from reduced fuel consumption would be distributed to all Iranians. But as economic pressures deepened in subsequent years, the government halted those transfers for middle- and higher-income households.

Iranian officials have repeatedly urged citizens to cut fuel use, though critics note that poor gasoline quality and outdated domestic automotive technology leave many drivers with no practical way to reduce consumption. Vehicles produced by local manufacturers often have high fuel-burn rates and limited efficiency improvements.

Some economists close to the government argue that the current price of gasoline remains far below its real cost. They say that when crude extraction, refinery processing, transport, storage and distribution are included, the true local cost of fuel is between 100,000 and 150,000 rials per liter. The gap, they contend, forces the state to absorb billions in losses to keep pump prices low.

The new 50,000-rial tier is expected to test public reaction at a time of mounting inflation and declining purchasing power, though authorities have not indicated whether further increases are planned for the next quarterly review.