Mehr report: raising Iran's third-tier petrol price to 10,000 tomans would cut about 6 million litres of daily use, but more than 70% of cars never reach that tier

Mehr News Agency reported on Monday, 27 July 2026 (5 Mordad 1405), on the debate over reforming Iran's "third tier" petrol price that, according to estimates, raising it from 5,000 to 10,000 tomans could cut daily petrol consumption by about 6 million litres. Iran's petrol imbalance has at times reached around 10 million litres a day, so even full delivery of that saving would leave a significant gap.

According to the report, the main constraint is the structure of consumption: more than 70 percent of cars never reach the third quota tier and remain on the subsidised or semi-subsidised tiers, so a higher price at that tier bears directly on only a minority of consumers. Mehr added that the price elasticity of petrol demand is low, at least in the short run, because part of consumption is tied to an ageing vehicle fleet, urban traffic, unbalanced city development and weak public transport, leaving no accessible alternative.

On the supply side, Mehr reported, Iran's refining capacity has not kept pace with consumption growth. The report concludes that raising the third tier should be treated as part of a larger policy package, including renewing the ageing fleet, tightening fuel-consumption standards for domestically produced cars, expanding public transport and strengthening distribution-monitoring systems, rather than as a final remedy for the petrol market.