Israel Raises Fuel Prices following War with Iran

The Israeli Ministry of Energy and Infrastructure announced on Sunday a modest hike in government-regulated gasoline prices, citing mounting economic pressure following the recent 12-day conflict with Iran.

Starting at midnight on Monday, the price of 95-octane gasoline at fuel stations across Israel will increase by 0.01 Israeli shekels per liter, bringing the total to 7.15 shekels ($2.12) per liter. This marks the second consecutive monthly increase, as reported in an official ministry statement.

According to Globes, a leading Israeli financial newspaper, the latest price adjustment reflects not only fluctuations in oil prices and currency exchange rates, but also the economic aftermath of the military confrontation with Iran.

Unlike past oil shocks that triggered sharp surges in global barrel prices, the global oil market reacted with relative moderation this time, the report noted. However, the cumulative financial burden of military operations and heightened security costs is increasingly influencing domestic pricing structures.

Traditionally, fuel prices in Israel are calculated at the end of each month based on the average oil prices in the Mediterranean market and the exchange rate between the shekel and the U.S. dollar—currently 3.38 shekels to the dollar. The final price also includes marketing fees, excise tax, and value-added tax (VAT).

Inflation Pressures Mount

The economic impact of the Iran-Israel conflict continues to ripple through the Israeli economy. Following the outbreak of war in Gaza earlier this year, the Israeli government raised VAT from 17% to 18%, contributing to an upward trend in consumer prices and inflation.

“The inflation crisis is not over,” said Danny Yardeni, Head of Nostro Management at Bank Leumi. “There’s pressure on rents due to the war, and not all airlines have resumed operations. But I believe the end of the crisis has reduced some of the uncertainty.”

Yardeni added that the private consumption sector has weakened, with many businesses temporarily closed and households spending less amid the state of emergency.

The government, for its part, has been forced to allocate significant funds for compensation, both for homeowners affected by missile strikes and for businesses disrupted during the hostilities.

While the immediate military conflict has subsided, economic aftershocks continue, and experts warn that fuel and consumer prices may remain volatile in the coming months, particularly if regional tensions reignite or if the global energy market shifts abruptly.