Iran to Cut Fuel Price Subsidies in Challenging Move Amid Economic Crisis

Iran is set to reduce fuel price subsidies, a move that is expected to increase economic hardship for the population and likely has the approval of the country’s top leadership, according to relevant documents, The Caspian Post reports, citing Iran International.

Costs of living are soaring in Iran while the currency has repeatedly plumbed new historic lows, posing a challenge to Iran's rulers as they face regional military setbacks and the return of a maximum pressure sanctions policy under Donald Trump.

Iranians had already sensed something was amiss when some fuel stations began installing eight-digit price displays at fuel stations.

The policy change comes in the form of a letter from the National Iranian Oil Refining and Distribution Company (NIORDC), part of the oil ministry, to fuel stations outlining steps to implement the plan.

It is set to massively reduce the monthly distribution of subsidized gasoline from the current 87 million liters to 42.5 million.

Under the new scheme, citizens will be entitled to 15 liters of subsidized gasoline monthly at 20,000 rials (2.5 US cents) per liter, up from the previous rate of 15,000 rials (2 cents).

The NPDC denied any change was forthcoming. The oil ministry “has no plans to change gasoline prices,” adding the ministry “does not have the authority to do so.”

A spokesperson for the Planning and Budget Organization last month underscored that any change in setting fuel products was treated as an utmost priority and "requires decision-making at the highest levels of national management."

Fuel price increases in Iran happen outside the budget, as in 2019 when gasoline prices rose with the Supreme Leader’s backing, bypassing parliamentary oversight.

Under the new policy, semi-subsidized gasoline will cost 80,000 rials (10 cents) per liter. The average income of Iranians per month is now around $150 while the costs for a family of four is at least $500 per month.