Iranian authorities on Sunday announced they were raising the price of petrol for heavier consumers, as the United States steps up sanctions seeking to isolate the country's economy. The price for the third tier of petrol consumption will double to 10,000 tomans (about 4.5 US cents) per litre from September 8, according to government spokeswoman Fatemeh Mohajerani. The first and second tiers of petrol consumption will remain unchanged.
Iran's petrol pricing system has three tiers: 1,500 tomans per litre for the first 60 litres a consumer uses in a given month, 3,000 tomans per litre for the next 50 litres, and 5,000 tomans per litre for consumption beyond 110 litres. The toman is an informal unit equivalent to 10 Iranian rials. The decision to increase the price for the third tier is politically sensitive, as Iran has long subsidised petrol, making it one of the world's cheapest fuels.
The price hike comes as the Iranian currency, the rial, has been under significant pressure. On the black market, the rial was trading at more than 2.2 million to the US dollar on Sunday, compared to around 1.7 million before the start of the Middle East war on February 28. The US Treasury Secretary recently laid out plans for the 'economic asphyxiation' of Iran, aiming to use financial pressure to hasten the end of the war. The new measures build on a sanctions regime that has been in place since 2018, when the US withdrew from an international deal on Iran's nuclear programme.
FAQs
Why is Iran raising petrol prices?
Iran is raising petrol prices primarily due to increased economic pressure from US sanctions. The US has been applying a range of sanctions to isolate Iran's economy, including a naval blockade on its ports to reduce oil exports. The government's decision to raise prices is an attempt to manage the economic impact of these sanctions.
How will the price increase affect consumers?
The price increase will primarily affect heavier consumers who use more than 110 litres of petrol per month. For these consumers, the cost per litre will double from 5,000 tomans to 10,000 tomans. However, the first and second tiers of consumption will remain unchanged, meaning those who use less than 110 litres per month will not see an increase in their petrol costs.
What are the current US sanctions on Iran?
The US has imposed a series of sanctions on Iran since withdrawing from the international nuclear deal in 2018. These sanctions target various sectors of the Iranian economy, including its oil exports. Recently, the US Treasury Secretary announced plans for 'economic asphyxiation,' aiming to apply even more financial pressure on Iran. This includes a naval blockade on Iran's ports to reduce its oil exports to zero.
