Gas prices in Israel may reach nine shekels per liter

The cost of fuel in Israel could cross a major threshold within days.

Finance Minister Bezalel Smotrich implemented a temporary reduction in the state excise tax on gasoline last month. An earlier order, signed a month prior, had cut the tax by 0.50 shekels per liter. As global oil prices increased, Smotrich doubled that reduction to 1 shekel per liter. The measure was designed to stabilize pump prices before the national elections. The current price for 95-octane gasoline stands at 7.77 shekels. The temporary relief is scheduled to expire on November 3.

Under standard conditions, taxes account for more than 60% of the retail price of gasoline in Israel. The state collects approximately 20 billion shekels annually from these levies. The Finance Ministry’s Budget Department estimates the recent reductions will cost the treasury 467 million shekels. This expenditure occurs while defense spending remains at record levels due to the ongoing war.

The timing of the tax expiration creates uncertainty for drivers. Smotrich must decide whether to extend the relief after the elections. If the current government is set to leave office, he may allow prices to jump, shifting the economic burden to the incoming administration.

Expectations of a third round of conflict involving Israel, Iran, and the United States have raised oil prices by about 10% compared to late September. The Energy Ministry’s Fuel Administration set the October price during that calmer period. The new price is expected to take effect as early as Saturday night. Even if the tax cut remains in place, gasoline prices are projected to rise by roughly 30 agorot per liter, pushing the cost just over 8 shekels. If the reduction lapses on November 3, the price could climb above 9 shekels. The final figure will be determined near the end of the week based on Mediterranean basin oil prices. The new rate may remain in effect for only a few days.