Pezeshkian takes on Iran’s gasoline subsidies, a risky gamble

Iranian President Masoud Pezeshkian is proposing to reform gasoline subsidies, a move that could upset the economy and social stability in an already tense political context.

Partagez:

Masoud Pezeshkian, elected President of Iran in 2024, is highlighting the need to reform gasoline subsidies, a measure that could have major consequences for the Iranian economy.
Iran’s massive gasoline subsidies keep fuel prices extremely low, costing the government billions of dollars every year.
These subsidies, while helping to maintain a certain level of social stability, are increasingly perceived as unsustainable in the current economic climate. As a reformist, President Pezeshkian has been critical of the populist economic policies of his predecessors, whom he accuses of having exacerbated the country’s economic problems.
However, he is aware that any changes to gasoline subsidies could provoke a violent reaction from the population.
In 2019, an increase in gasoline prices triggered massive protests across the country, exacerbating already existing social tensions.
The ensuing crackdown claimed many lives and drove an even deeper wedge between the regime and the population.

Potential impact on the economy and purchasing power

Current gasoline subsidies are a mainstay of the Iranian economy, but they also represent an unsustainable financial burden for the state.
Rampant inflation and the ongoing devaluation of the rial have already severely weakened Iranians’ purchasing power.
An increase in gasoline prices, which could reach up to 500,000 rials per liter according to sources close to the government, would have a devastating effect on the cost of living, notably by raising transport costs and the prices of basic consumer goods.
For energy sector professionals, this reform could lead to a major reconfiguration of Iran’s domestic fuel market.
The question of the long-term viability of subsidies, against a backdrop of economic crisis and international sanctions, has become central.
Pezeshkian must therefore strike a balance between the need to reduce public spending and the imperative of maintaining social peace.

The political stakes of subsidy reform

Pezeshkian’s proposal to reduce gasoline subsidies also raises questions about the stability of the Iranian regime.
The mullah regime, dominated by religious elites and the Revolutionary Guards, relies heavily on these subsidies to maintain social order.
An abrupt reduction in these subsidies could weaken the government’s legitimacy, particularly if it leads to a new wave of protests as in 2019.
Although Pezeshkian is a reformist, he operates within a complex political system where any attempt at major economic reform can be perceived as a threat by the regime’s conservative factions.
The latter, who indirectly benefit from current subsidies, could resist any change perceived as destabilizing to their interests.

An uncertain future for the Iranian economy

Iran is at a critical juncture.
Gasoline subsidy reform, while necessary to avoid long-term fiscal collapse, could have unpredictable consequences.
Industry professionals are keeping a close eye on developments, aware that how this reform is implemented will determine the country’s economic and political future.
If Pezeshkian succeeds in carrying out these reforms while maintaining social stability, he could strengthen his position within the regime.
However, failure could lead to a deep crisis, jeopardizing not only his government, but also the survival of the mullahs’ regime.

According to the 2025 report on global energy access, despite notable progress in renewable energy, insufficient targeted financing continues to hinder electricity and clean cooking access, particularly in sub-Saharan Africa.
While advanced economies maintain global energy leadership, China and the United States have significantly progressed in the security and sustainability of their energy systems, according to the World Economic Forum's annual report.
On the sidelines of the US–Africa summit in Luanda, Algiers and Luanda consolidate their energy collaboration to better exploit their oil, gas, and mining potential, targeting a common strategy in regional and international markets.
The UK's Climate Change Committee is urging the government to quickly reduce electricity costs to facilitate the adoption of heat pumps and electric vehicles, judged too slow to achieve the set climate targets.
The European Commission will extend until the end of 2030 an expanded state-aid framework, allowing capitals to fund low-carbon technologies and nuclear power to preserve competitiveness against China and the United States.
Japan's grid operator forecasts an energy shortfall of up to 89 GW by 2050 due to rising demand from semiconductor manufacturing, electric vehicles, and artificial intelligence technologies.
Energy-intensive European industries will be eligible for temporary state aid to mitigate high electricity prices, according to a new regulatory framework proposed by the European Commission under the "Clean Industrial Deal."
Mauritius seeks international investors to swiftly build a floating power plant of around 100 MW, aiming to secure the national energy supply by January 2026 and address current production shortfalls.
Madrid announces immediate energy storage measures while Lisbon secures its electrical grid, responding to the historic outage that affected the entire Iberian Peninsula in late April.
Indonesia has unveiled its new national energy plan, projecting an increase of 69.5 GW in electricity capacity over ten years, largely funded by independent producers, to address rapidly rising domestic demand.
French Minister Agnès Pannier-Runacher condemns the parliamentary moratorium on new renewable energy installations, warning of the potential loss of 150,000 industrial jobs and increased energy dependence on foreign countries.
The European battery regulation, fully effective from August 18, significantly alters industrial requirements related to electric cars and bicycles, imposing strict rules on recycling, supply chains, and transparency for companies.
The European Parliament calls on the Commission to strengthen energy infrastructure and accelerate the implementation of the Clean Industrial Deal to enhance the continent's energy flexibility and security amid increased market volatility.
The European Commission unveils an ambitious plan to modernize electricity grids and introduces the Clean Industrial Deal, mobilizing hundreds of billions of euros to strengthen the continent's industrial and energy autonomy.
In the United States, regulated electric grid operators hold a decisive advantage in connecting new data centres to the grid, now representing 134 GW of projects, according to a Wood Mackenzie report published on June 19.
The French National Assembly approves a specific target of 200 TWh renewable electricity production by 2030 within a legislative text extensively debated about the future national energy mix.
In 2024, US CO₂ emissions remain stable at 5.1bn tonnes, as the Trump administration prepares hydrocarbon-friendly energy policies, raising questions about the future evolution of the American market.
The early publication of France's energy decree triggers strong parliamentary reactions, as the government aims to rapidly secure investments in nuclear and other energy sectors.
Seven weeks after the major Iberian power outage, Spain identifies technical network failures, while the European Investment Bank approves major funding to strengthen the interconnection with France.
The European Union has announced a detailed schedule aiming to definitively halt Russian gas imports by the end of 2027, anticipating internal legal and commercial challenges to overcome.