In recent days, Mohsen Paknejad, the Iranian regime’s oil minister, announced the introduction of a type of “special super gasoline” to be imported by the private sector and sold at specific stations for more than 50,000 tomans (500,000 rials / $0.50) per liter. He simultaneously stressed that this has no connection to rationed gasoline or the existing prices of 1,500 and 3,000 tomans (15,000 and 30,000 rials, roughly 1.5 to 3 cents) and that the 60-liter monthly quota for vehicles will remain unchanged.
On the surface, the government seems to be targeting specific consumers—particularly luxury car owners and those demanding higher-quality fuel. In reality, however, this decision raises serious questions about the future of Iran’s subsidy policies and the likelihood of a broader increase in gasoline prices.
The continuous devaluation of the rial and lack of investment in refining capacity have forced the Iranian regime, despite its claims of self-sufficiency, to rely on gasoline imports. According to regime officials, about $8 billion was spent on fuel imports last year alone.
The social experiment model
In political economy, one method governments use to gauge public reaction to price reforms is through limited trial projects. The sale of imported gasoline at 50,000 tomans fits this framework. Oil officials insist that this fuel is only for specific consumers and unrelated to subsidized quotas. However, this move can be interpreted as a form of “social conditioning,” gradually nudging people to accept that the real price of fuel is far higher than current subsidized rates.
From a behavioral perspective, the aim of creating a “dual pricing” system between subsidized and free-market gasoline could push society toward accepting gradual price increases. The November 2019 protests showed the regime that any sudden, across-the-board price hikes can trigger severe and costly social backlash. For this reason, establishing incremental price tiers starting with specific groups is likely the strategy the government is pursuing. In the 2019 nationwide protests, the Iranian regime killed 1,500 people.
Budgetary pressure and political signals
Iranian regime president Masoud Pezeshkian and members of his cabinet have repeatedly stated that they do not intend to raise fuel prices for the “underprivileged.” At the same time, however, Pezeshkian and other officials have often criticized the “disproportionate consumption of wealthier groups,” questioning why these groups should receive subsidized gasoline. This contradiction shows that while the government fears the social consequences of price hikes, it also fully recognizes that the current policy is financially and economically unsustainable.
Given the regime’s chronic budget deficit, recurring energy crises in both winter and summer, and the heavy costs of fuel imports, the pressure to raise gasoline prices is greater than ever. The introduction of 50,000-toman gasoline by the private sector may be the first step in this process—a step presented as “liberalization for luxury vehicles” but one whose consequences will inevitably spread to society as a whole.
Although regime officials currently insist that subsidized gasoline prices will remain unchanged, economic evidence and political signals indicate that sooner or later, the debate on raising prices will extend to the general level. Pezeshkian’s government faces a choice: either continue bearing the financial burden of fuel subsidies and cover deficits by printing money and fueling inflation or take the difficult path of price reforms.
The increase in gasoline prices is less about providing a luxury fuel for certain cars and more a sign of a potential shift in the Iranian regime’s energy policies in the near future—a shift that could bring broad economic and social consequences.
