Imported Super Gasoline in the Tank, Inflation on the Table

Khodrocar -  Iran consumes more than 120 million liters of gasoline per day, while domestic production fluctuates between 96 and 120 million liters. Meanwhile, hundreds of thousands of billions of tomans are spent annually on subsidizing regular gasoline, a burden that contributes to budget deficits and inflation. Experts believe the introduction of imported super gasoline could serve as a prelude to broader energy subsidy reforms, potentially redirecting saved resources toward refinery investments or alternative energy development.

Imported super gasoline is typically supplied under Euro 5 standards, with an octane rating above 95 and close to 98. This makes it better suited for modern engines, particularly imported and turbocharged vehicles, as it offers greater resistance to engine knock or pre-ignition.

High-octane fuel in new, luxury, or technologically advanced vehicles can result in better performance, reduced knocking noise, and in some cases lower fuel consumption. As a result, demand for this fuel among such vehicles is expected to be strong. Currently, imported super gasoline is traded on the Iran Energy Exchange and the open market at around 80,000 tomans per liter, with the full cost borne directly by consumers. In recent days, however, long queues of luxury vehicles have been observed at stations offering this fuel, driven by the desire for improved driving performance.

While this move is part of a broader fuel consumption management policy, importing gasoline at free-market prices could help reduce pressure on domestic production and curb fuel smuggling. At the same time, it has sparked concerns about the future of subsidy policies.

A key question raised is whether this trend could widen the class divide. Some experts confirm this concern, arguing that a form of hidden dual pricing could exacerbate inequality. Wealthier drivers, able to afford premium fuel, would benefit from higher-quality gasoline, healthier engines, and lower maintenance costs, while middle- and lower-income groups would rely on lower-quality fuel, leading to greater wear and higher repair expenses. In practice, this creates indirect discrimination, even if the price of subsidized gasoline remains unchanged, as service quality diverges.

Access inequality is another issue. In many cities, imported super gasoline is either unavailable or supplied inconsistently. If this trend continues, high-quality fuel may become a luxury commodity, while lower-quality gasoline becomes the de facto public standard.

Under a more balanced scenario, if regular gasoline were upgraded to an acceptable standard and super gasoline were reserved for specific vehicles, revenues from premium fuel sales could be allocated to public transportation and fuel quality improvements, potentially reducing class disparities. However, under current conditions, the trend largely benefits upper-income groups at the expense of middle and lower classes. If sustained, it risks deepening social inequality, unless accompanied by simultaneous improvements in subsidized fuel quality and supportive social policies—so that high-quality fuel does not become a class-based privilege.

From an economic standpoint, the impact of imported super gasoline can be viewed as short-term relief, medium-term cost, and long-term risk, unless managed carefully.

In the short term, the policy is expected to ease pressure on domestic production and reduce emergency imports, allowing the government to maintain control over subsidized gasoline prices while supplying a small portion of demand through the free market—thereby avoiding sudden price shocks and public dissatisfaction.

In the medium term, however, hidden costs are likely to emerge. These include indirect increases in transportation costs and added pressure on the productive economy, leading to higher service prices without any official gasoline price hike—a form of creeping inflation. Rising fuel costs for middle-income households and producers would reduce purchasing power, forcing cuts in non-essential spending. This, in turn, would result in demand stagnation, reduced money circulation, and a slowdown in the real economy.

In the long term, the policy could create new foreign currency dependencies, increasing vulnerability to sanctions and political shocks. If expanded, it could intensify currency pressures and foster a new form of structural dependency, rather than genuine economic reform.

In summary, the inflationary impact of imported super gasoline can be described as short-term support for the government, a medium-term burden for consumers, and a long-term risk for the economy.

Forecasts suggest that its impact on next year’s inflation will be indirect, transmitted through transportation, services, vehicle maintenance, and inflationary expectations—amounting to 1 to 2.5 percentage points, potentially translating into a 1.5 to 3 percent rise in overall inflation.

This is largely due to Iran’s expectation-driven economic environment. The current pricing of imported super gasoline increases the likelihood that the government may reassess the “real” price of gasoline and consider reforming subsidized fuel prices. Even if such reforms do not materialize, these expectations alone could add 0.5 to 1 percentage point to inflation.

Overall, while imported super gasoline is not inherently inflationary, it acts as a gradual inflation catalyst.

Report by Mitra Memsani