The Iranian government denied reports that it planned to raise petrol prices, after a state-affiliated media outlet published and quickly deleted what appeared to be an official document approving such a move.

The Islamic Republic has experienced an unprecedented surge in consumption in recent months despite efforts to quell usage and the weakening Iranian rial. Concern is also mounting over the quality of the fuel being distributed in the country, which has seen unhealthy and dangerous air pollution in recent years. The government has also removed obstacles to importing electric vehicles (EVs) into the country to wean the general population off low-cost petrol cars, which are emptying government coffers. 

The Young Journalists Club (YJC), which is a subsidiary of Iran’s state broadcaster, on October 11 released a document showing that President Masoud Pezeshkian’s cabinet had last month approved a price hike “to tackle petrol shortages and ensure energy security.”

Within hours, however, Ali Ahmadnia, the government’s director of public information, dismissed the claim, saying on X that “some media outlets have alleged an increase in petrol prices. The Government Information Council firmly denies this and confirms there are no plans to raise fuel rates.”

YJC swiftly removed the report and images of the alleged cabinet document, but several Iranian news outlets had already republished them.

According to the leaked decree, which was circulated to relevant ministries on October 5, the cabinet sought to narrow the price gap between petrol and compressed natural gas (CNG) to encourage motorists to switch fuels.

Regular unleaded petrol costs just IRR30,000 ($0.026) per litre vesus the also cheap CNG for IRR5,700 ($0.005) per cubic metre.

CNG has struggled to gain traction in Iran despite being nearly five times cheaper. The fuel’s limited driving range — about 300 kilometres per tank versus 800 kilometres for a standard 60-litre petrol tank — and the relatively small number of filling stations have deterred drivers.

There are around 2,500 CNG stations, half idle due to maintenance, compared with 4,200 petrol stations nationwide, while the only vehicles available in CNG are those produced by Iran Khodro and SAIPA.

Iran distributes around 130mn litres of petrol daily, while its refineries can produce only about 107mn lpd. To plug the shortfall, Tehran has been importing petrol since 2021, costing the government some $4bn annually.

Officials estimate that between 20mn and 30mn litres of petrol and diesel are smuggled daily to neighbouring countries, where prices are up to 30 times higher for petrol and 180 times higher for diesel.

The illicit trade is believed to drain around $10bn from state revenues each year.

President Pezeshkian has repeatedly criticised Iran’s heavily subsidised fuel prices, arguing that the country is forced to divert revenue from other sectors to pay for costly imports and fuel subsidies.

The last time Iran pushed up fuel prices was in November 2019, which sparked nationwide protests that left more than 200 people dead, according to the then interior minister.