Gasoline prices to fall 42 agorot Sunday, defying forecasts of a jump to near-record levels

Unless Finance Minister Bezalel Smotrich extends a temporary excise tax reduction, gasoline will jump to NIS 8.35 per liter on November 5.

Gasoline prices will fall by 42 agorot per liter at midnight between Saturday and Sunday, the Energy and Infrastructure Ministry's Fuel and Gas Administration announced on Thursday, defying earlier forecasts of a sharp increase to near-record levels.

The price reduction comes after an approximately 13% decline in gasoline prices in the Mediterranean basin, partially offset by an approximately 2% rise in the dollar exchange rate.

The maximum price of a liter of self-service, unleaded 95-octane gasoline, including VAT, will fall to NIS 7.35, compared with the current NIS 7.77. The additional charge for full-service fueling will remain unchanged at 26 agorot per liter.

The announcement came as a surprise to Israeli drivers. Earlier on Thursday, sources in the energy market estimated that prices at gas stations would rise by approximately 30 agorot, reaching around NIS 8.30 per liter.

Those forecasts were based on a combination of rising global oil prices amid expectations of a regional escalation involving Iran and the strengthening of the US dollar following the election results.

However, the Fuel and Gas Administration's calculations produced a positive turnaround, delivering a significant price reduction that will provide immediate financial relief to millions of vehicle owners across Israel.

Despite the welcome news at gas stations, drivers will need to closely monitor developments at the Finance Ministry in the coming days.

Consumers currently benefit from a reduction in the excise tax on gasoline amounting to NIS 1 per liter. The measure, introduced by Finance Minister Bezalel Smotrich for a limited period, carries a budgetary cost of approximately NIS 326 million per month.

The current temporary order is set to expire on November 3.

The Energy and Infrastructure Ministry has already issued a warning: "If the excise tax order is not updated, the temporary provision concerning the excise tax order will expire overnight between November 4 and 5, meaning that from November 5, the maximum price will stand at NIS 8.35 per liter."

To prevent the dramatic NIS 1-per-liter increase on November 5, the finance minister must sign an extension of the tax benefit for another month.

Such a move would bring the total budgetary cost of the excise tax subsidy over the past three months to approximately NIS 800 million.