Israeli Gasoline: Prices May Hit 9 Shekels

The cost of gasoline in Israel may exceed nine shekels per liter following the upcoming elections. Finance Minister Bezalel Smotrich is scheduled to let a temporary tax reduction expire on November 3. This deadline coincides with a rise in global oil prices, creating a scenario where the cost of 95-octane fuel jumps sharply. The current price stands at 7.77 shekels per liter.

Smotrich implemented the tax cut last month to prevent fuel costs from spiking before voters went to the polls. He previously signed an order to lower the excise tax by half a shekel per liter. As oil prices increased, the Finance Minister doubled the reduction to one shekel. Under standard conditions, taxes account for more than 60% of the final pump price. These taxes generate roughly 20 billion shekels in annual state revenue.

The Finance Ministry's Budget Department estimates that the reductions over the past two months will cost the state approximately 467 million shekels. This financial burden arrives as the ongoing war drives defense spending to record highs. After the election results are known, Smotrich must decide whether to extend the relief. If the current government appears unlikely to remain in power, he may allow prices to rise, shifting the economic consequences to the next administration.

The first price increase is expected as early as Saturday night. Expectations of a third round of fighting involving Israel, Iran, and the United States have lifted oil prices by about 10% compared to late September. That was when the Energy Ministry's Fuel Administration set the gasoline price for October.

If the tax cut remains in place, gasoline is expected to rise by around 30 agorot per liter. That would take the price to just over eight shekels. If the reduction lapses, the price could climb above nine shekels. The final price will be determined toward the end of this week based on oil prices in the Mediterranean basin. The new price may remain in effect for only a few days.