Gasoline Prices in Israel May Hit 9 Shekels Next Week

95-octane gasoline in Israel is priced at 7.77 shekels per liter today. By the end of this month, that number could climb past the nine-shekel mark for the first time in a long while. The jump would happen just days after the national elections.

The price spike is driven by two factors working at the same time. First, a temporary reduction in the excise tax on fuel is set to expire on November 3. Second, global oil prices have risen by approximately 10% since late September. This increase in crude oil costs is attributed to expectations of a third round of fighting between Israel, Iran, and the United States.

Finance Minister Bezalel Smotrich introduced the tax relief last month to hold down prices before the vote. An earlier order signed a month prior had cut the tax by half a shekel per liter. As oil prices began to climb, Smotrich doubled that reduction to one shekel per liter.

Under standard conditions, taxes account for more than 60% of the final pump price in Israel. The Fuel Administration at the Energy Ministry sets the monthly price based on Mediterranean basin oil prices. The new rate will be finalized toward the end of this week. The first price hike is expected to take effect as early as Saturday night.

The Finance Ministry’s Budget Department estimates that the tax reductions from the past two months have cost the state 467 million shekels. This expenditure comes while the ongoing war has pushed defense spending to record highs.

If Smotrich allows the tax cut to lapse, the price of gasoline could surpass nine shekels per liter. If he extends the relief, the price is still expected to rise by about 30 agorot per liter due to oil market movements. In that scenario, the cost would settle at just over eight shekels per liter.

After the elections, Smotrich must decide whether to keep the relief in place. If the current government does not retain power, he may let prices surge, leaving the incoming administration to manage the economic fallout. The new price, whatever it is, may remain in effect for only a few days.