Iran Faces Fuel Shortages and Economic Turmoil Amid US Sanctions and Rising Inflation

Long queues have formed at fuel stations across Tehran following new US sanctions tightening the economic pressure on Iran. Due to high demand, fuel stations have imposed a 20-liter limit per vehicle, forcing drivers to return repeatedly. A Tehran fuel station worker reported that many rush to refuel before tanks run dry, fearing renewed conflict or price hikes. Videos circulated on social media show drivers waiting up to 45 minutes only to find stations closed before their turn.

Iran, a major crude oil exporter, relies heavily on gasoline imports to cover domestic shortages. However, the US maritime blockade, effective since July 14, has severely disrupted Iran's fuel supply, compounded by Israeli and US airstrikes that damaged refining capacity early in the conflict. Iranian sources estimate a daily shortfall of about 15 million liters from the total 135 million liters demand.

US Treasury Secretary Scott Bessant announced expanded secondary sanctions targeting Iran's trade partners to intensify the economic squeeze. Despite this, Iran insists it can withstand the pressure and refuses US demands to reopen the strategic Strait of Hormuz. Both sides accuse each other of violating a June agreement aimed at gradually reopening the waterway and paving the way for peace talks.

Iranian President Ebrahim Raisi warned that selling gasoline below market prices exerts enormous strain on government resources needed for food subsidies and worker support. Gasoline prices remain heavily subsidized, costing drivers between 15,000 and 50,000 rials per liter (approximately $0.0075). Officials are considering reducing fuel quotas but have not finalized any price changes, mindful of the population’s severely weakened purchasing power.

The Iranian rial recently hit a record low of 2 million rials per US dollar amid nearly 90% annual inflation and food inflation around 130%. Energy analyst Morteza Bahrozifar described gasoline prices as an inflation "barometer" that could trigger severe economic shocks. He recommended short-term supply measures alongside improvements in public transport, local automotive production, and refining capacity to mitigate social and economic fallout. US President Donald Trump condemned Iran’s crackdown on protesters as a "massive humanitarian crisis" that must be stopped immediately.