Fuel Prices in Israel Poised to Exceed 8 Shekels Per Liter

Fuel prices in Israel are expected to rise again next week, with current estimates suggesting an increase of over 40 agorot per liter. The final price will be determined in five days, at the end of the month. According to a report by Channel 12 News on Thursday, if the current forecast holds and the government does not intervene further, the price of a liter of gasoline could surpass 8 shekels.

The anticipated price hike is attributed to the continued rise in global oil prices, influenced by tensions with Iran, the Houthi control of the Bab al-Mandab strait, and the conflict between Russia and Europe. This increase comes less than three weeks after a move by Finance Minister Bezalel Smotrich to lower fuel costs. Earlier this month, Smotrich reduced the fuel excise tax by 50 agorot, bringing the maximum price for self-service 95-octane gasoline down from 8.25 shekels to 7.75 shekels per liter. The tax reduction was estimated to cost the state treasury approximately 310 million shekels.

The earlier tax cut faced criticism regarding its timing, as it was set to expire shortly after the upcoming October 27th elections. However, supporters argued it provided immediate relief to the public. Now, with the potential increase of more than 40 agorot, almost the entire previous reduction could be erased, pushing the price back above the 8-shekel mark.

With the final price to be set at the end of the month, there remains a possibility that Smotrich will opt for another tax reduction to absorb the increase and prevent fuel prices from surging again, just a month before the elections.