Israel Gasoline Prices: 42-Agrot Drop to NIS 7.35

The Fuel and Gas Administration under Israel's Energy and Infrastructure Ministry announced Thursday that the maximum price for a liter of self-service, 95-octane unleaded gasoline will drop by 42 agorot. The new price, including VAT, will be NIS 7.35, down from the current rate of NIS 7.77. This reduction takes effect at midnight between Saturday and Sunday.

The price cut defied earlier estimates from energy market sources, who predicted a hike of approximately 30 agorot per liter on Thursday. Those forecasts projected prices would reach around NIS 8.30. The initial predictions were driven by rising global oil costs linked to potential regional escalation involving Iran and a stronger US dollar following recent election results. Instead, the administration's calculations reflected a roughly 13% decline in gasoline prices within the Mediterranean basin, which outweighed the roughly 2% rise in the dollar exchange rate.

The charge for full-service fueling remains unchanged at 26 agorot per liter. Drivers had anticipated a financial burden but received a reduction that provides immediate relief. The announcement surprised many consumers who had braced for higher costs at the pump.

A separate fiscal issue will determine whether this lower price holds. Consumers currently benefit from a temporary excise tax reduction of NIS 1 per liter. Finance Minister Bezalel Smotrich introduced this measure for a limited period, which costs the state approximately NIS 326 million per month.

The current temporary order expires on November 3. The Energy and Infrastructure Ministry issued a warning regarding the timeline. The ministry stated that if the excise tax order is not updated, the provision will expire overnight between November 4 and 5. From November 5, the maximum price would jump to NIS 8.35 per liter.

To avoid that increase, the finance minister must sign an extension for the tax benefit for another month. If extended, the total budgetary cost of the subsidy over the past three months will reach approximately NIS 800 million.

The next critical step is the Finance Ministry's decision on the extension, which must be finalized before the current order lapses on November 3.