The International Energy Agency, in its latest report on global energy subsidies, states that Iran tops the list. According to the report published on the agency's official website, Iran spent $45 billion on energy subsidies (oil products, gas, electricity) last year, which shows a 55% increase compared to the previous year. This amount of subsidy is equivalent to about 10% of the gross domestic product and 15% of total global energy subsidies last year. The main reason for this increase is attributed to the significant rise in oil prices. Iran also increased gasoline imports by 4.5% last year, and thermal electricity production (using gas, diesel, and fuel oil) rose by more than 8.5%. Electricity production from Iran's hydroelectric dams decreased by about 4% last year, but this year, due to intensified drought and water shortages in dams, hydroelectric production in Iran has halved, and it is expected that Iran will incur more subsidies for thermal electricity production. On the other hand, oil prices have also surged this year, and it is expected that the amount of subsidies paid by Iran for energy consumption in various sectors of the country will face a significant increase this year, especially since the value of Iran's national currency has also sharply declined. The agency states that Iran spent $16.5 billion on oil products, $12.3 billion on electricity, and over $16.3 billion on gas last year. Recently, Iran's oil minister announced that the government intends to ration subsidized gasoline. Rationed gasoline will be sold at the current rate of 1,500 tomans, which is 6 to 10 times the price of gasoline in neighboring countries, and recent reports have indicated a surge in gasoline and diesel smuggling to neighboring countries. Jala Mirzaei, a member of the Energy Commission of the Parliament, recently stated that 'probably after Arbaeen, gasoline will be sold at two prices.' This parliament member provided details of this plan, saying: 'Accordingly, 60 to 80 liters of subsidized gasoline will probably be provided to consumers at the current price of 1,000 tomans per liter, and the second rate will be offered at the free market price.' The free market price means a several-fold increase over current prices. On the other hand, gasoline consumption is only a small part of Iran's energy consumption, and it is unclear whether reducing subsidies in this sector will significantly impact the total energy subsidies in Iran. Iran is also facing rising inflation, and it is uncertain whether the increase in fuel prices will ultimately lead to further inflation. The agency states that global energy subsidies halved from 2012 to 2016, partly due to falling oil prices. Oil prices fell from over $105 in 2012 to about $45 in 2016, and last year they rose again, currently reaching $77.
Iran is the 'largest' energy subsidizer in the world
Iran has become the largest energy subsidizer globally, spending $45 billion on energy subsidies last year, a 55% increase from the previous year. The rise in oil prices and the government's plan to ration subsidized gasoline amid inflation and currency devaluation are significant issues. This situation highlights Iran's economic struggles and the impact of energy policies on its economy.
👥 Key Players
📰 What Happened
Iran has been identified as the largest energy subsidizer globally, spending $45 billion on energy subsidies last year, primarily due to rising oil prices. The government is now planning to ration subsidized gasoline amidst ongoing economic challenges.
- Iran's energy subsidies account for about 10% of its GDP.
- The government plans to introduce a two-tier gasoline pricing system.
💡 Why It Matters
📚 Background
Iran's economy heavily relies on oil exports, and energy subsidies are a key part of its domestic policy to manage public sentiment and consumption. Rising oil prices and inflation complicate this balance.
🏷️ Entities Mentioned
Translated from the original and edited for English readers. View original source →
Translation confidence: 85%