Oil, gas and Iran economic analyst
Iran’s decision to double the price of gasoline sold outside subsidized quotas could generate less than $500 million in additional annual revenue under current consumption patterns, but can it resolve the structural pressures behind the country’s growing fuel shortage?
After weeks of reduced gasoline supplies and kilometer-long queues at filling stations, the government raised the non-quota price to 100,000 rials per liter, roughly 4.3 US cents.
Iran now has a three-tier gasoline pricing system. Each vehicle receives 60 liters per month at 15,000 rials per liter, or about 0.65 US cents, and another 50 liters at 30,000 rials, or about 1.3 cents. Gasoline purchased beyond those quotas costs 100,000 rials per liter, double the previous non-quota rate.
Government spokesperson Fatemeh Mohajerani has said the increase will not affect around 85 percent of car owners because their monthly consumption remains below the combined 110-liter subsidized quota.
At first glance, selling gasoline for only about 4.3 cents per liter while continuing to provide 110 liters per month at significantly lower subsidized rates may make the financial impact of the increase appear limited.
But the figures suggest the government could still raise several hundred million dollars annually. Whether the policy can substantially reduce consumption or Iran’s dependence on gasoline imports is another matter.
Government revenue
Iranian authorities have not published detailed current figures showing exactly how much gasoline is sold at each of the three price tiers.
But with roughly 22 million gasoline-powered passenger cars and a combined monthly quota of 110 liters per vehicle, those vehicles could consume a maximum of around 80 million liters of subsidized gasoline per day even if every driver used the full quota.
With national gasoline consumption at roughly 134 million liters per day, that would leave about 54 million liters being consumed outside the subsidized quotas.
That estimate is broadly consistent with remarks last November by the head of the National Iranian Oil Products Distribution Company, who said around 40 percent of gasoline refueling was being carried out using emergency cards provided at filling stations rather than motorists’ personal fuel cards.
A confidential 94-page report by the National Iranian Oil Refining and Distribution Company reviewed by Iran International puts average gasoline consumption in the Iranian year 1403, which ended in March 2025, at around 124 million liters per day, including additives and petrochemical products.
If around 54 million liters continue to be purchased each day at the non-quota rate, the additional 50,000 rials charged per liter would generate roughly 98.5 trillion rials over a year.
At the current exchange rate of around 2.3 million rials per dollar, that amounts to approximately $428 million.
The figure is a scenario based on current consumption patterns rather than a firm revenue forecast. The higher price could encourage some motorists to reduce consumption or rely more heavily on their subsidized quotas.
The government has also eliminated subsidized gasoline quotas for newly registered and imported vehicles, requiring them to purchase fuel at the non-quota rate.
Customs and Industry Ministry data show that Iran has added an average of around one million domestically produced or imported vehicles to its roads annually over the past five years.
Once a full year’s cohort of around one million additional vehicles is subject to the higher rate for 12 months, assuming average monthly consumption of 120 to 150 liters per vehicle, the latest increase could generate about another $35 million in annualized revenue.
Under these assumptions, the government could eventually generate less than half a billion dollars in additional annual revenue from the higher gasoline price.
Can higher prices ease the shortage?
According to Central Bank of Iran statistics, the country imported approximately $2.9 billion worth of gasoline last year.
Iranian officials say the country currently needs to import around 10 million liters of gasoline per day, with the cost at regional market prices broadly comparable to last year’s import bill.
President Masoud Pezeshkian has repeatedly argued for higher gasoline prices, saying it makes little sense for Iran to purchase gasoline abroad at much higher prices and then sell it domestically at heavily subsidized rates.
But even if the higher non-quota price generates close to $500 million annually, that would amount to only around 17 percent of the $2.9 billion Iran spent on gasoline imports last year.
The additional revenue, therefore, would not come close to covering the country’s gasoline import costs.
Officials have also argued that higher prices could reduce consumption. But many of Iran’s heaviest gasoline users work in freight transport, passenger transport and other service-sector businesses that depend directly on vehicle use.
For those workers, consuming less gasoline can also mean earning less income rather than simply cutting unnecessary fuel use.
Other structural factors are simultaneously increasing gasoline demand.
Official statistics show that CNG supplies for dual-fuel vehicles have declined every year over the past five years as Iran’s natural-gas shortage has worsened.
CNG consumption fell to around 16 million cubic meters per day last year, 38 percent below its 2020 level. The decline is equivalent to adding roughly 9 million liters to daily gasoline demand.
Iran has also not commissioned a new oil refinery since 2018, while around one million vehicles continue to be added to the domestic fleet each year.
The combination of rising vehicle numbers, declining CNG availability and limited refining capacity is therefore likely to deepen the gasoline deficit and increase Iran’s need for imports even if higher prices curb some demand.
The continued depreciation of the rial poses another problem.
The US dollar has gained around 120 percent against the rial since September 2025. If the currency continues to weaken, part of the additional revenue generated by the gasoline increase will quickly lose value in dollar and real terms.
There is also inflation.
Iran’s 12-month average inflation rate has climbed to nearly 70 percent, while food prices are around 128 percent higher than a year ago.
Higher gasoline prices can feed directly into transportation costs and, in turn, the prices consumers pay for goods and services. A policy that generates less than half a billion dollars in additional revenue could therefore impose broader costs on households already struggling with steep price increases.
The much larger cost of sanctions
The sums involved become even smaller when compared with the economic losses associated with sanctions on Iran’s oil exports.
According to Central Bank statistics, Iran generated $57.4 billion in oil-related exports last year when its crude and petroleum-product exports were valued at Gulf market prices.
That represents their nominal market value. The amount Iran ultimately receives is substantially lower.
Homayoun Falakshahi, a senior analyst at commodity intelligence company Kpler, told Iran International that around 25 to 30 percent of Iran’s oil revenues are lost between loading and delivery because of the mechanisms required to circumvent sanctions.
Those costs include discounts offered to Chinese buyers, payments to brokers, falsification of shipping documents, ship-to-ship transfers, longer transit times, floating-storage costs and the expense of chartering vessels belonging to the so-called shadow fleet.
On that basis, Iran lost an estimated $15 billion to $17 billion last year from the oil it actually exported because of discounts and sanctions-circumvention costs.
There is also the oil Iran was unable to export.
Iran’s crude exports in 2025 averaged around one million barrels per day below pre-sanctions levels. At prevailing prices, the value of that foregone export volume was approximately $25 billion a year.
Taken together, those figures suggest Iran suffered more than $40 billion in potential oil-revenue losses and additional export costs associated with sanctions last year.
That is around 80 times the less than $500 million in additional annual revenue the government could generate from the gasoline measures under current consumption assumptions.
The gap has widened further this year.
Since mid-July, the movement of newly loaded Iranian crude from the country’s oil terminals toward final overseas markets has effectively ground to a halt.
Some crude has continued to be loaded, but instead of heading to its final destination, much of it has accumulated offshore in waters south of Iran. Around 55 million barrels of Iranian oil are currently held in floating storage there and effectively trapped inside the maritime blockade.
Deliveries to China have nevertheless continued because not all of the crude arriving at Chinese ports was recently loaded in Iran.
Kpler data obtained by Iran International show that Iranian crude discharged in China averaged around 500,000 barrels per day last month, down from roughly 800,000 barrels per day in June and July.
Much of that oil had left Iran earlier and was drawn from previously accumulated floating stocks in Asian waters.
That explains how Iranian crude can continue arriving in China even as the movement of newly loaded oil from Iran to overseas markets has largely stopped.
The comparison underscores the scale of Tehran’s economic problem.
The government could raise less than half a billion dollars annually by charging consumers more for gasoline, yet the price increase does little to address the structural forces driving Iran’s gasoline deficit, while the country simultaneously faces tens of billions of dollars in lost oil revenues and sanctions-related costs.
Messages, videos and accounts sent to Iran International described deployments of police, special units and Basij forces in Tehran, Mashhad, Shiraz, Karaj, Isfahan, Tabriz, Birjand, Khorramabad, Khomein, Abadan and Qeshm.
Reports of slower internet connections also emerged from several cities, including Tabriz and Babol.
Petrol prices doubled on Monday for drivers buying fuel outside their monthly subsidised quota, rising from 50,000 to 100,000 rials a litre, about 2.3 to 4.5 US cents. The government announced the increase two days earlier.
Monthly subsidized allocations remain unchanged. Motorists can buy 60 liters at 15,000 rials per liter, about 0.7 cents, and another 50 liters at 30,000 rials, about 1.3 cents.
The dollar figures are negligible. The wages are the point. Average monthly pay in Iran is around 250 million rials, about $113 at Tuesday's rate, and many workers earn closer to 200 million, or roughly $90 a month.
Security forces gather around fuel stations
Several residents of Mashhad told Iran International that security forces appeared around petrol stations on Sunday, hours before the new price took effect.
“On Monday evening, I passed three gas stations. Several police vehicles were stationed outside each one, and at one station there were large numbers of Basij motorcyclists and special unit forces,” one resident said.
Another Mashhad resident described police and special units positioned at fuel stations across the city.
Video sent to Iran International from Khorramabad in western Lorestan province showed security personnel, vehicles and motorcycles deployed around the city, including what appeared to be a mounted machine gun.
Fuel supplies had already faced disruptions over the previous three weeks in areas including Razavi Khorasan, South Khorasan, Tehran and Alborz provinces.
Citizens in early September reported station closures, long lines, restrictions on purchases and waits of about two hours to obtain 10 liters of gasoline.
A Birjand resident said some filling stations had closed and displayed notices blaming “technical problems,” while police were positioned at others.
Similar deployments were described in Shiraz, where a local reported a large security presence around Maali-Abad early Tuesday, and in Karaj, particularly Fardis, Gohardasht and Mehrshahr.
A resident of Khomein in Markazi province also described a long line and numerous police officers at a fuel station on Shohadaye Daneshjoo Street.
Special units deploy in Tehran
Several Tehran residents reported increased security deployments from Monday evening, including in Shahr-e Rey and Salsabil neighborhoods.
“The station was heavily secured. Special units and the Basij were constantly moving around, and the streets were crowded,” a resident who visited a fuel station near Ferdowsi Square in central Tehran around midnight said.
Another who went to a station on Pirouzi Street in the east described long vehicle lines with special units positioned nearby.
People in Isfahan and Abadan also reported armed police at filling stations. In Qeshm, a resident said armed personnel were deployed around major squares on Monday evening and that a confrontation occurred at the entrance to a filling station in Dargahan.
Two messages from Tabriz described a large security presence alongside deteriorating internet service.
“The city of Tabriz is full of special units. The forces are armed, and heavy equipment can also be seen,” one said.
A Babol citizen also reported slower mobile and fixed internet connections, though the reason for the disruption could not be established.
Gasoline prices carry particular political sensitivity in Iran. A sudden increase and rationing in November 2019 triggered demonstrations across dozens of cities that quickly expanded into nationwide anti-government protests.
Security forces killed around 1,500 people during the crackdown, according to a Reuters tally at the time. Thousands were arrested and authorities imposed a nationwide internet shutdown.
Government defends higher gasoline price
First Vice President Mohammad Reza Aref defended the new rate, arguing that even 100,000 rials per liter remains far below the government's cost of importing gasoline.
Imported gasoline costs the government more than 700,000 rials per liter, equivalent to about 30 cents, Aref said. Imported fuel would gradually be sold at prices closer to its cost, he added.
The government's figures for what petrol costs to produce have not held up well to examination. In November 2025, after officials put the cost at 340,000 rials a litre, about 15 cents at current rates, Iran International went through the refineries' own financial statements. They showed operating costs, excluding the value of the crude going in, of around 35,000 rials a litre, roughly 1.6 cents, a tenth of the official figure.
Economist Mousa Ghaninejad has estimated actual gasoline consumption inside Iran at about 70 million liters a day and argued that much of the remainder recorded as consumption is smuggled out of the country.
Iranians warn of knock-on price increases
Thousands of people responding to an Iran International question about the fuel increase focused on its potential impact beyond filling stations, warning that transportation costs could push up food prices, fares and other everyday expenses.
“100,000 rials for a liter of gasoline may just be a number for some people, but for people it means another step toward making life harder,” one respondent wrote.
Another said petrol was not the problem on its own, and pointed to food. A five-liter container of cooking oil that used to cost 22 million rials, about $9.90, now sells for 40 million, roughly $18.
On a monthly wage of 200 million rials, that is a fifth of a month's pay for one container of oil.
“We buy everything at expensive dollar-linked prices, but our base salary is only $100. Where in the world can you see something like this?” one person wrote.
Another said wages would have to rise alongside prices, since households could not absorb repeated increases on incomes that had barely moved.
For younger respondents the loss was smaller and more particular. "The feeling of going on a trip is gone. Going out for a 10-minute drive is gone. We young people said goodbye to small pleasures a long time ago," one wrote.
The strikes targeted civilian and economic sites in Abha, Khamis Mushait, Jizan and Najran, according to Turki al-Maliki, spokesperson for the Saudi-led coalition in Yemen. He said women and children were among those injured.
Yahya Saree, the Houthi’s military spokesman, also said that the group launched a “broad military operation” deep inside Saudi territory with drones and ballistic missiles to target Saudi energy sites belonging to oil giant Aramco.
Saudi Arabia’s Energy Ministry said the attacks caused fires at several energy facilities and utilities, temporarily halting some operations. Emergency crews were working to extinguish the fires, secure the affected sites and assess the damage.
“The coalition will take all necessary operational measures to deter this terrorist militia,” Maliki said, pledging a firm response.
The attacks came after Iranian officials warned that energy infrastructure across the Persian Gulf, including US oil and gas interests, was vulnerable following renewed exchanges of attacks involving vessels around the Strait of Hormuz.
Houthi attacks helped push oil prices to their highest levels in more than six weeks, according to Reuters. Shipping through the Strait of Hormuz and the Red Sea has already slowed amid threats to commercial vessels and uncertainty over access to the two critical waterways.
The Houthis, who control Yemen’s capital and much of the country’s north, declared a naval blockade against Saudi Arabia in July and have since attacked vessels in the Red Sea and targets inside the country.
The GCC denounced the strikes, describing them as a threat to regional security and backing measures taken by Riyadh to protect its territory and population. Qatar, Kuwait, Bahrain, Egypt and Jordan also issued separate condemnations.
The attacks mark a further escalation in the war that began with US and Israeli strikes on Iran on February 28. Repeated missile and drone strikes, along with attacks on shipping and energy infrastructure, have punctuated lulls in the fighting.
US President Donald Trump said on Monday that oil prices would fall sharply once the United States won the war, adding that “Iran will never have a nuclear weapon.”
Afkar-e Naft, a Telegram channel which reports on issues affecting permanent oil industry employees, said the demonstrations were part of protests held every Monday.
Images published by the channel showed workers at several offshore installations holding placards calling for the removal of salary caps, full payment of wages and benefits, fairer compensation and changes to the tax system for offshore employees.
“Full payment of wages and benefits,” read one placard, while another said, “Fair pay is our right, not an extra privilege.”
Other signs called for an overhaul of the wage system for operational oil workers and the removal of what protesters described as “unfair restrictions” on salary payments.
Several workers also highlighted the conditions under which oil production has continued during the war. One placard read, “Uninterrupted production in a war zone,” while another referred to “uninterrupted production in border areas.”
The protesters are also seeking payment of outstanding compensation under Article 10 of the law governing the duties and powers of Iran’s Oil Ministry.
The so-called Article 10 back pay refers to accumulated payments employees say they are owed following implementation of provisions governing compensation and employment conditions for Oil Ministry personnel.
The protests come as Iran’s economy faces mounting pressure from the regional war and a US maritime blockade that was reimposed in mid-July. Satellite imagery reviewed by Iran International shows a sharp decline in visible vessel activity at Shahid Rajaee and Imam Khomeini, two of the country’s most important commercial ports, since the blockade resumed.
The impact has been particularly severe on Iran’s oil trade, a crucial source of government revenue and foreign currency. Kpler tanker-tracking data reviewed by Iran International showed Iranian crude loadings averaging about 287,000 barrels per day in August through Aug. 21, compared with roughly 2 million barrels per day before the war — a fall of about 85%.
Washington has simultaneously intensified its financial campaign against Tehran. On Aug. 24, the US Treasury launched Operation Economic Outcast, dubbed an “Economic D-Day,” saying it aimed to sever Iran’s remaining financial and commercial connections and increase the risks for foreign banks and companies doing business with Tehran. The campaign has since targeted financial channels in countries including the United Arab Emirates and Türkiye.
The pressure has coincided with a steep deterioration in household purchasing power. Iran’s rial has fallen to a record low of about 2.2 million to the US dollar this month, compared with roughly 958,000 a year earlier.
Official figures for July showed average annual inflation at around 62%, year-on-year inflation at 82% and food inflation at 134%, adding to the pressure on wages and living standards.
