Gasoline prices drop to 7.35 shekels despite forecast hikes

The Energy and Infrastructure Ministry’s Fuel and Gas Administration announced on Thursday that gasoline prices will decrease by 42 agorot per liter at midnight between Saturday and Sunday. This adjustment lowers the maximum price for a liter of self-service, unleaded 95-octane gasoline to 7.35 shekels, down from the current 7.77 shekels.

The price cut contradicts earlier market predictions. Sources in the energy sector had estimated on Thursday that prices would rise by approximately 30 agorot, reaching roughly 8.30 shekels per liter. Those forecasts assumed that rising global oil prices and a strengthening US dollar would drive costs up.

The administration’s calculations instead reflected a roughly 13% decline in gasoline prices within the Mediterranean basin. This regional drop outweighed the impact of an approximately 2% increase in the dollar exchange rate. The additional charge for full-service fueling remains at 26 agorot per liter.

The reduction provides immediate savings for vehicle owners, though the benefit is temporary. Drivers currently pay a reduced excise tax of 1 shekel per liter. Finance Minister Bezalel Smotrich introduced this measure for a limited period, which carries a monthly budgetary cost of about 326 million shekels.

The current temporary tax order is scheduled to expire on November 3. The ministry has warned that if the order is not updated, the temporary provision will end overnight between November 4 and 5. In that scenario, the maximum gasoline price would jump to 8.35 shekels per liter starting November 5.

To avoid this increase, the finance minister must sign an extension for the tax benefit for another month. Extending the subsidy would bring the total budgetary cost of the excise tax reduction over the past three months to approximately 800 million shekels.