Tehran's Gas Lines Reflect Economic Strain

Lines have grown outside gas stations across Tehran in recent weeks, with some people waiting two hours or more to fill up, as the United States has tightened its blockade and threatened more severe sanctions, according to reports from the Associated Press. The uncertainty deepened after Treasury Secretary Scott Bessent vowed to fully sever the country from the global economy, a promise that coincided with long queues already expanding amid shortages.

Iranian officials have spoken openly of reducing heavy fuel subsidies as a means to endure the blockade, with President Masoud Pezeshkian acknowledging the sacrifices. On Sunday, he told a state audience, "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 so we won't succeed," referring to the six-month war with the US and Israel.

Residents are adjusting to the reality of scarcity. A 34-year-old barber, Hashem Abadi, said, "Maybe we will face a shortage of fuel," adding, "I rush to the filling stations whenever my tank is down to half or so." Taxi driver Mahmoud Chavoshi echoed the sentiment: "I'm filling my car as much as possible since soon it will be sold at higher prices."

The war, launched nearly six months ago by US President Donald Trump and Israel, has battered Iran's economy. Double-digit inflation and a rial currency at record lows make basic goods harder to afford. Despite the pressure, there are no signs yet of widespread protests, though the memory of large demonstrations at the start of the year—which authorities reportedly crushed violently—lingers.

Subsidised Fuel: A Government Burden

For the 93 million Iranians, heavily subsidised fuel is a lifeline and a huge fiscal burden for a government struggling to balance its books, according to Al Jazeera's reporting. The International Monetary Fund predicts a 5.4 percent GDP contraction in 2026, and experts note that fuel price hikes have historically sparked unrest, including nationwide demonstrations in 2019 and weeks before the January protests.

President Pezeshkian told the nation on Friday that fuel is considerably cheaper compared to international standards, noting that the government pays 65 US cents (1.3 million rials) per litre produced by refineries, while citizens enjoy the lowest price tier at less than a cent (15,000 rials) per litre. Two other categories are available at 30,000 rials and 50,000 rials respectively, with higher price points for imported or newly registered vehicles.

Subsidised purchases are limited by monthly quotas and require fuel cards. The cheapest tier allows 60 litres per month, while the second tier has been cut repeatedly with the war's escalation. Quotas for the latter dropped from 100 to 70 litres, then to 50 after fighting reopened the Strait of Hormuz. Pump stations offer extra fuel via single-use cards, adding only 25 litres in Tehran.

Iranians consume roughly 135 million litres daily, against domestic production of about 121 million, leading to supply shortages. To bridge the gap, authorities have tried to boost refinery output, mix fuel with petrochemical products, and dilute quality, while fuel imports halted due to the war.

Government's Price Liberalisation Options

The head of energy optimisation, Esmail Saghab-Esfahani, laid out three options on state television. The first is a first-come, first-served system with unchanged prices but limited supply, closing pumps once daily rations run out. The second offers roughly 30 litres to all citizens at the lowest price, with non-drivers allowed to sell their unused quota. The third involves full liberalisation, with the government reportedly considering a price of about 872,000 rials (44 cents) per litre, a move that would likely spike transport costs and fuel inflation. The move is seen as hugely inflationary.

First Vice President Mohammad-Reza Aref on Friday insisted that the cheapest tier must remain, though the second quota could shrink gradually. He advocated for transparent liberalisation with proceeds directed to the vulnerable.

A planned pilot of liberalised pricing in Kerman province, which scheduled such prices in 204 stations, was cut short at the last minute, with government officials saying they were not consulted.

Impact on Iranians

Alongside queues and price concerns, Iranians face broader economic hardship. The Statistical Center of Iran reported prices in July were 88 percent higher than a year before, with food inflation exceeding 128 percent. Governor Central Bank figures support the rising cost of everything.

Shortage and halt to imports are the shared experience. But there has been no protest. Actually, many Iranians have told media they are either adapting or frustrated. A clothing shop worker in Tehran, earning 300 million rials ($150) a month, criticised the government's comparison of fuel prices with other countries: "The government keeps talking about how fuel prices don't match other countries, but it doesn't like to talk about how salaries don't even begin to match other places, or other expenses."

A 51-year-old taxi driver echoed the sentiment: "Everything I buy has grown more expensive over the last week, from milk to pasta."

The growing queues do not reflect empty bank lines; there are no lineups outside banks, and grocery stores and pharmacies are still well-stocked, but customers are using credit. A grocery store owner, Morteza Daryani, told reporters, "Some of our regular customers buy now and pay later, since their pockets are not as full as before."

Strait of Hormuz and Global Risks

Iran has resorted to largely closing the Strait of Hormuz, a waterway that carried a fifth of the world's oil before the war, in a bid to pressure the global economy and U.S. gas prices ahead of midterm elections. Analysts say the strategy is risky. Sascha Bruchmann of the International Institute for Strategic Studies observed that Iran is betting that the hard time will run out first, while Trump endured the same. "Both clocks are ticking, and no one knows which clock is right," he said.

Iran's oil sales to China have provided a lifeline, but new US threats and the UAE's announced cutting off trade with Iran could reshape those channels.

Analysts caution that resilience has limits. Mohammad Farzanegan of the University of Marburg noted that "there are 'always limits to resistance and resilience,' as people lose purchasing power every day, which could push frustration beyond a level the state can manage."

While widespread protests are not currently seen, a note of caution exists. The government remains wary of triggering unrest with any fuel price hike, torn between fiscal needs and public discontent.