Iranians queue outside a petrol station in Tehran, May 1, 2019

Iran’s Government has raised the price of petrol by 50%, reducing long-established subsidies.

State TV said the price of a liter is now 15,000 rials (12.7 US cents), rather than 10,000 rials. The monthly subsidized ration for each private car is 60 litres per month — after that, fuel costs 30,000 rials per liter.

Mohammad Bagher Nobakht, head of Iran’s Planning and Budget Organization, said on State TV that revenues from the increased prices will go towards additional subsidies for 18 million families — about 60 million of Iran’s 82 million population.

“The president insists that all extra income should be paid back to people,” Nobakht announced at midnight. “The first payments will be handled within the next week or 10 days.”

Amid comprehensive US sanctions on Iran’s oil exports, the regime has faced a surge in smuggling of petrol to neighboring countries.

Iran’s oil production has fallen to 2.15 million barrels per day, down from 3.8 million bpd in November 2018 when the US sanctions were introduced. Exports are down between 80% and 95% from an April 2018 level of 2.5 million bpd.

See Iran Daily, Nov 6: Top Politician Says Oil Exports Down 95%

Iran also faces a lack of refining capacity, with the sanctions limiting the supply of spare parts for plant maintenance.

President Hassan Rouhani acknowledged the Government’s problems with revenues in a speech on Tuesday, ““Without money, we cannot run the affairs of the state….We have never had so many problems in selling oil. We never had so many problems in keeping our oil tanker fleet sailing.”

See Iran Daily, Nov 13: Rouhani — “Without Money, We Cannot Run the State”

Iran’s inflation rate is more than 40%, and the International Monetary Fund projects a 9.5% contraction in GDP this year.

The price rise and rationing has been expected for months. In May, rumors of the measures led to motorists queuing for hours outside petrol stations.

See Iran Daily, May 2: Queues Amid Reports of Petrol Rationing