Israel May See Sharp Fuel Price Hike After November 1st

The potential surge is driven by the expiration of a temporary fuel tax reduction implemented by Finance Minister Bezalel Smotrich. In response to rising global oil prices, which reached approximately $110 per barrel due to tensions in the Strait of Hormuz, Smotrich had doubled the tax discount from 50 agorot to one shekel per liter. If this tax relief is not extended, the price will automatically jump by one shekel to 8.77 shekels per liter.

In addition to the expiring tax break, a strengthening US dollar, which has reached 3.11 shekels, is expected to add another 10 to 20 agorot per liter. According to Maariv, analyst Fanning estimated that the exchange rate could add about 27 agorot per liter, bringing the baseline price to around 8.04 shekels even before accounting for the full tax relief cancellation. Economists warn that a major fuel price surge could increase Israeli inflation by 0.5% in November.

The tax reductions have cost the state budget nearly 500 million shekels in lost revenue during a war year with record defense spending, and extending them through November would cost an additional 300 million shekels. Professional officials within the Ministry of Finance oppose extending the benefit. Minister Smotrich has not yet decided whether to sign an order to extend the tax relief after the elections.