---
title: "Iran signals a fuel price rise in an economy the IMF expects to shrink 5.4 percent"
description: "Petrol costs 15,000 rials a litre on the cheapest quota. Refineries are paid 1.3 million. The government is weighing a price of 872,000 rials, cancelled a pilot in Kerman at the last minute, and remembers what happened in 2019."
category: "Business"
category_url: https://newsparlor.com/category/business
author: "Marcus Reed"
published: 2026-08-23T16:38:49.000Z
updated: 2026-08-23T16:38:49.000Z
canonical: https://newsparlor.com/article/iran-signals-a-fuel-price-rise-in-an-economy-the-imf-expects-to-shrink-5-4-perce
tags: ["iran", "fuel-subsidies", "sanctions", "inflation", "economy"]
---
# Iran signals a fuel price rise in an economy the IMF expects to shrink 5.4 percent

Petrol costs 15,000 rials a litre on the cheapest quota. Refineries are paid 1.3 million. The government is weighing a price of 872,000 rials, cancelled a pilot in Kerman at the last minute, and remembers what happened in 2019.

Iran's government is preparing to raise fuel prices, with a decision expected within weeks and no final choice yet made, [according to Al Jazeera](https://www.aljazeera.com/economy/2026/8/23/iran-government-signals-fuel-price-hike-on-eve-of-new-us-sanctions).

## The gap that makes this unavoidable

Petrol in Iran is sold in tiers. The cheapest is 15,000 rials a litre on a 60-litre monthly quota. A second tier costs 30,000 rials, on a quota cut from 100 litres to 70 in March and to 50 in July. A third is 50,000 rials.

The state pays refineries 1.3 million rials a litre.

That is the entire problem in one line. The government buys at 1.3 million and sells at 15,000, a ratio of roughly 87 to one on the cheapest tier, and it does so on a country-wide scale: consumption runs at 135 million litres a day against production of 121 million.

The price under consideration is 872,000 rials a litre, about 44 cents. A pilot at that level was to begin in Kerman province on August 13 and was cancelled at the last minute.

## Why now

The war and the American blockade of Iranian seaports have made a subsidy of this size harder to carry, and the surrounding numbers are severe. The International Monetary Fund expects Iran's GDP to contract by 5.4 percent in 2026. Prices in July were 88 percent higher than a year earlier, with food inflation above 128 percent. The rial has hit an all-time low of 2 million to the dollar.

An economy contracting at that rate with inflation at that level is one in which a fuel price rise lands on people who are already absorbing a shock.

## What the government is saying

President Masoud Pezeshkian acknowledged as much in a speech on Sunday: "I understand that we have many problems in society now. We are doing our best so the people are not afflicted, but the enemy is doing its absolute best."

First Vice President Mohammad-Reza Aref set out a middle course on Friday: the cheapest tier and its 60-litre quota should stay, the second quota could fall gradually, and prices should be liberalised transparently.

Esmail Saghab-Esfahani, who heads energy optimisation, laid out three options on state television. Al Jazeera also quotes ordinary Iranians, among them Mostafa, a clothing shop worker in western Tehran earning 300 million rials a month, who observed that the government does not discuss how salaries here compare with those elsewhere.

## The thing everyone involved is thinking about

Al Jazeera notes that fuel price rises brought nationwide demonstrations in 2019, and that price increases preceded protests in January this year.

That history is the reason a pilot scheme in one province was cancelled at the last minute, and the reason the vice president is arguing for keeping the cheapest tier untouched. A government that needed only to fix an accounting problem would have raised the price already. What it is actually trying to do is find a version of the rise that does not put people on the streets during a war.

Whether such a version exists is the open question, and nobody quoted in the report claims to know.

We verified this account from a single publication. It gives no date for the change and no detail of what new US sanctions take effect or when.

## Sources

- [Iran's government signals fuel price hike on eve of new US sanctions](https://www.aljazeera.com/economy/2026/8/23/iran-government-signals-fuel-price-hike-on-eve-of-new-us-sanctions)