A surprise decision to ration and raise fuel prices by 50% has led to long queues at gas pumps and protests around the country. President Rouhani argues the move is for the good of the people.
Demonstrations broke out around Iran Friday night after the government raised the price of fuel by at least 50%, the country's state news agency reports.
In the city of Sirjan in central Iran, demonstrators tried to set a fuel warehouse on fire in protests that police described as "severe."
Protesters also gathered in a dozen other cities. Some crowds attempted to block traffic. State media reported that protests had ended by midnight.
Authorities raised fuel prices and instituted rationing measures without warning earlier in the day.
The government limited fuel consumption to 60 liters per vehicle per month, down from a prior limit of 250 liters. Prices have spiked over 50% to 15,000 rials (€0.12, $0.13). Every liter above 60 is subject to a penalty cost of 60,000 rials.
The move left drivers waiting hours in lines at gas pumps. Many people said they were shocked when they went to refuel their vehicles. Police were deployed near gas stations to keep order.
Earmarked for subsidies
Iranian President Hassan Rouhani told advisors that the move was intended to put money in its citizens' pockets and that the government has earmarked all funds to be used on subsidies for poor families.
"No one should imagine that the government has done this because it is economically struggling; not at all, not a rial of this will go to the treasury," Rouhani said, state media reports.
The economy has suffered under US-imposed sanctions in place since 2018. Inflation is at 40% and the economy is expected to contract 9% this year.
Fuel in Iran is heavily subsidized, costing 10,000 rials (€0.08, $0.09, approximately) prior to the price hike. Rouhani argues that raising prices is a natural move considering the current conditions. The country's 80 million citizens currently consume about 90 million liters of cheap oil a day.
"Increasing petrol prices is to the people's benefit and also to help the society's strata under [economic] pressure," he said.
The fuel-rationing measures should bring in 300 trillion rials ($2.55 billion) annually, head of the country's Planning and Budget Organisation Mohammad Bagher Nobakht said on state television, adding that payments will start within the next 10 days.
They will range from 550,000 rials ($4.68) for couples to just over 2 million rials ($17.46) for families of five or more.