Iran's Strategic Fuel Price Hike Aims to Curb Demand

Iran is set to increase fuel prices under limited conditions starting in December to tackle rising demand. Emergency fuel cards will charge 50,000 rials per litre, a 10% cost of state's purchase price. The measure aims to ease financial strain and reduce consumption without sparking public unrest.

In an effort to manage escalating fuel demand without igniting public dissent, Iran has announced a strategic increase in fuel prices under particular conditions. The decision comes amid mounting pressures on the nation's subsidised fuel system.

Starting December, refueling with emergency cards will cost 50,000 Iranian rials per litre, equating to $0.44 at the free market rate. This price represents just a fraction of what it truly costs the government to purchase fuel from refineries, and it is only permitted when drivers do not have their smart fuel cards.

The government's attempt to moderate consumption is governed by an intricate pricing regime, which also impacts various vehicle types differently. Cars without smart cards face a steeper cost, while government vehicles and imported cars will bear the brunt of the highest rates. Changes also loom for CNG-powered cars among the taxi fleet, expected to see quota adjustments in February.

(With inputs from agencies.)