Israel Fuel Markets: Gasoline Costs Poised to Breach Nine Shekels

Israeli drivers face a potential spike in fuel costs as a temporary tax reduction set to expire on November 3 meets rising global oil prices. The current price for 95-octane gasoline stands at 7.77 shekels per liter. Analysts project the cost could surpass the nine-shekel mark if the relief measures lapse.

Finance Minister Bezalel Smotrich implemented the tax cut last month to cushion consumers before the upcoming elections. This move doubled an earlier reduction that had lowered the excise tax by half a shekel per liter. The combined effect of these adjustments is projected to cost the state treasury approximately 467 million shekels over the past two months.

The fiscal strain arrives during a period of elevated government spending. Defense budgets have reached record levels due to the ongoing war. Under standard conditions, taxes account for more than 60% of the final price of gasoline in Israel. The state typically collects around 20 billion shekels annually from these levies.

Global market forces are currently driving prices upward. Expectations of a third round of conflict involving Israel, Iran, and the United States have pushed oil prices up by roughly 10% since late September. The Energy Ministry’s Fuel Administration established the October gasoline price during a period of lower crude costs.

Even if Smotrich extends the tax relief, gasoline prices are expected to rise by approximately 30 agorot per liter. This would bring the cost to just over eight shekels per liter. If the reduction expires as planned, the price could climb above nine shekels.

The new price will be finalized toward the end of this week based on current oil prices in the Mediterranean basin. Smotrich must decide whether to extend the relief or allow the cost surge to impact the incumbent government. The first price increase is anticipated as early as Saturday night.

The new pricing may remain in effect for only a few days. The final decision on the tax status will influence the short-term volatility in the fuel market.