Iran doubles petrol prices

Iran has doubled the price of petrol for consumers who exceed their monthly quota, putting a higher cost on heavy fuel use as households already grapple with falling purchasing power and soaring inflation.The revised rate came into effect early Tuesday and applies to purchases above 110 litres (29 gallons) a month. Consumers crossing that limit will now pay 100,000 rials (about 7 cents) per litre, compared with the rate introduced in December.The government said the additional money generated from the increase would be distributed to households. Its announcement referred to the “current situation” without specifically mentioning the war with the United States.This is the second increase in petrol prices since December. Such increases have historically been politically sensitive in Iran, with a price rise in 2019 triggering nationwide protests followed by a crackdown that reportedly killed more than 300 people.

Currency hits record lows

The latest increase comes at a time when the Iranian currency has been weakening sharply and people’s purchasing power has declined. The US dollar was trading at 2.22 million rials on Monday.Iran nevertheless continues to have some of the world’s lowest petrol prices. But the higher rate for heavy users adds another pressure point for a population of more than 90 million.Keramat Veis Karami, CEO of the state oil distribution company, said that the new rate would apply to 15 per cent of consumers, according to the official IRNA news agency.The change also comes against the backdrop of record fuel consumption. Karami said Iran consumed 145 million litres (38 million gallons) of petrol per day in August, compared with domestic production capacity of 122 million litres per day. The balance is imported.The higher price is intended to help bring down consumption, which experts have linked to ageing cars and spare parts in Iran, along with insufficient public transportation.But petrol prices are closely tied to the wider cost of living. Experts have warned that higher fuel prices will add to inflation in a country already facing an annual inflation rate of about 67 per cent, according to the country’s statistics centre, a government agency.The sensitivity around petrol prices is not new. Cheap gasoline has for generations been viewed as a birthright in Iran. A price increase in 1964 triggered mass demonstrations and led the shah to deploy military vehicles to replace those of striking taxi drivers.