“Tehran meters gasoline at a 110-liter monthly quota and prices a sangak loaf by provincial order; Washington keeps the lettered list that says which cargo crossing the strait a U.S. insurer may cover.” — from the editor’s desk
a loaf of sangak at a Tehran bakery, 155,000 rials from 23 June 2026 by order of the provincial authorities, its flour allocated by the Nanino platform on the bakery's sales
LINK: the Targeted Subsidies Reform Law, passed 5 January 2010 and launched 18 December 2010 — Article 5 for flour and bread, fuel raised toward 90 percent of Gulf FOB, up to 50 percent of net proceeds to households, and every rial of the price rises deposited in one "subsidy targeting account with the General Treasury" (Article 12), not an oil-export account; in January 2026 the preferential dollar is withdrawn from every staple but wheat and a 10 million rial staples credit loaded onto cards
the single article of 15 and 20 March 1951, proposed by Musaddiq's Majlis oil committee, putting "all operations for exploration, extraction, and exploitation" "in the hands of the Government," and the nine-article law of 1 May 1951 declaring oil revenue "indisputably due to the Persian nation" and ordering a National Oil Company statute drawn up; it overrode Article 21 of the 1933 Convention, and the ICJ found 9–5 in 1952 that it had no jurisdiction — the government has owned the pump price since
three prices, one owner — the bakery wall, the Treasury account and the pump; the account has run a deficit of about 1–2 percent of GDP since 2010, was fronted by a central-bank credit line, and its books and audits have not been made public
Chapter 1: The Price on the Wall
27 October 2026
Picture a loaf of sangak, the long flatbread, still warm, carried home folded over your arm like a towel. Now picture the wall behind the counter of the Tehran bakery where you bought it, because on the morning of Tuesday, June 23, 2026, the number on that wall changed. Residents arriving at bakeries, Iran International reported, "found new official prices in effect following an order issued by Tehran provincial authorities." Lavash, 27,000 rials. Barbari, 100,000. Sangak, 155,000. Before September 2024, the same report says, sangak sold for 30,000. Hold that loaf. It is going to cross a strait.
I should correct something before we start, because the clerk who drew this route wrote that you bought the bread with a ration coupon. You did not. The ration in an Iranian bakery sits one step back, on the flour. Since 2022 the authorities have used what that report calls "the Nanino digital monitoring platform, introduced in 2022 to distribute subsidized flour based on bakery sales." The baker sells at the decreed price; the platform counts the sales; the count sets how much subsidized flour the baker gets next. Many bakers, the report adds, "say technical problems and disputed calculations have reduced their flour allocations." The coupon exists, and we will meet it. But the price on the wall is set by an order, and the flour behind the counter is metered by a machine. You have, in your hand, a regulated object.
Here is how it came to be regulated this way, and the answer is a statute, passed by Iran's parliament on January 5, 2010, and approved by the Guardian Council on January 13. The International Monetary Fund translated it in full in a 2011 paper, and its Article 5 is about your loaf: "The government is required to make available the flour and bread subsidies to consumers, who have applied, to the extent payable in accordance with the annual budget bill, through appropriate methods." Article 4 adds "gradual targeting of subsidies payable on wheat, rice, cooking oil, milk, sugar." Article 1 is the big one. It moves fuel prices, over five years, "up to a level which shall not be less than 90 percent of Persian Gulf FOB prices." The Targeted Subsidies Reform Law, in other words, takes the cheap thing and makes it expensive on purpose, and then promises to hand the difference back.
Now the plumbing, because this is the part the clerk got wrong. The route card says the cash came out of "a single state oil-export account." The record says otherwise. Article 12: "The government is required to deposit all income sources resulting from implementation of this law into a special account titled subsidy targeting account with the General Treasury." The income is the price increases themselves. What Iranians pay extra at the pump and on the gas and power bills goes into one account at the Treasury, and Articles 7, 8 and 11 say how it comes out. Households: "up to 50 percent of net proceeds." Industry: "required to spend 30 percent." The government itself: "up to 20 percent." So the account is not filled from the barrels Iran sells abroad. It is filled by Iranians, paying more for what they already bought, so that some of it can be handed back to them. Article 15 creates an organization to run it, the Subsidy Targeting Organization.
It started on a Saturday. "On Saturday, December 18, 2010, at 9:00 p.m. Tehran time," the IMF paper records, the president went on television and "announced the start of what he termed the most sweeping economic 'surgery' in Iran's modern history." After midnight came the new fuel prices. Bread came last, deliberately: prices would rise "only after all households received a supplementary 'targeted subsidy,'" and on December 28 the media "announced that all households received the supplementary Rials 80,000 (US$8) compensation related to increase in bread price." The surgeon paid the patient before cutting.
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“The official line, in the words of the president who sent the newest version of this machine out on New Year's Day 2026: "We are not removing subsidies; we are giving them to the final consumer." The old subsidy went to whoever imported cheaply at a preferential rate. The new one goes to the household, on a card, every month.”
The folds back him on the mechanics. On January 1, 2026, the government said the 28,500-toman preferential dollar "would no longer be allocated." On January 4, its spokeswoman said the credit would rise "from 3,000,000 rials to 10 million rials," loaded onto cards with which households "can buy staples," starting January 10. And wheat was spared: the agriculture ministry was ordered "to remove all food staples except wheat from the subsidized imports list." The bread kept its cheap dollar. The protests, which had begun with shopkeepers on December 28, kept going.
So here is the shape, the loaf and the law. A price set by order on a wall. A flour ration metered by sales. And behind both, one account at the Treasury, filled by price rises and emptied as cash. Every one of those things depends on a price the government sets, and the most important price it sets is not for bread.
Keep the loaf on the table and pick up something heavier: a bound volume from the International Court of Justice, the United Kingdom's case against Iran, filed in 1951. Toward the back, translated into English, is a law short enough to read before your tea goes cold. It has one sentence. "In the name of the prosperity of the Persian nation, and with a view to helping secure world peace, we the undersigned propose that the oil industry of Persia be declared as nationalized throughout all regions of the country without exception, that is to say, all operations for exploration, extraction, and exploitation shall be in the hands of the Government." Read the last six words again. In the hands of the Government. That clause is why there is a price on the wall at all.
Last week I showed you an account at the Treasury in Tehran, filled when the government raises the prices of fuel, gas and power at home. You may have wondered by what right one government sets the price of everything that comes out of the ground. Here is the right, and the date it was written.
First the thing it ended. On April 29, 1933, the Court's judgment records, Persia signed an agreement with the Anglo-Persian Oil Company, later the Anglo-Iranian, ratified by the Majlis on May 28, 1933. It was the second concession, not the first. The first was William Knox D'Arcy's, of 1901, which Britain's own memorial describes as granted "for a duration of 60 years from May 1901," and which Persia had moved to cancel in 1932. The 1933 convention replaced it, and it contained, in Article 21, a promise: "This Concession shall not be annulled by the Government and the terms therein contained shall not be altered either by general or special legislation in the future, or by administrative measures or any other acts whatever of the executive authorities." Hold that sentence. It is about to be overruled by a shorter one.
Here is how the shorter one was built, because it was built in two stages, like a lock and its key. Stage one is the principle. Britain's memorial records that on February 19, 1951, the chairman of the Majlis oil committee, Dr. Mohammad Musaddiq, "formally proposed to the committee that the oil industry throughout Iran should be nationalized." The Majlis approved the single article on March 15; the Senate on March 20. Stage two is the machinery: a nine-article law "concerning the procedure for enforcement," passed on April 28 and 30, and, with the first, given imperial assent on May 1, 1951. Article 1 forms "a mixed Board composed of 5 Senators and 5 Deputies" and the finance minister. Article 2: "The Government is bound to dispossess at once the former Anglo-Iranian Oil Company." Article 5 orders the board to "draw up, as soon as possible, the statute of the National Oil Company." Note the verb. The law does not create the National Iranian Oil Company; it orders its charter written.
And Article 4 is the sentence the clerk was reaching for. "The entire revenue derived from oil and its products is indisputably due to the Persian nation." The route card called this the moment crude became a domestic entitlement. That is a reading, and the text is narrower: the revenue belongs to the nation, and the operations belong to the government. What follows from those two clauses, for the next seventy-five years, is that the price an Iranian pays for a liter of the nation's own gasoline is not a market's number. It is the government's.
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“The official line, in Britain's 1951 application to the Court: the Act of May 1, 1951 was "a unilateral annulment, or alteration of the terms, of the Convention concluded in 1933," "contrary to the express terms of Articles 21 and 26 of that Convention." A government had signed a promise not to legislate, and then legislated.”
The Court did not answer him on the merits. On July 22, 1952, by nine votes to five, it found "that it has no jurisdiction in the present case." The single article stood because no tribunal in The Hague had the power to say otherwise.
Which brings you back to your table, by way of the pump. On September 7, 2026, the Associated Press reported that Iranians "buying more than their quota of 110 liters (29 gallons) of gasoline a month" must now pay 100,000 rials a liter, "the second such hike since December," and that "an increase in 2019 sparked nationwide protests and a crackdown." The announcement was the government's. The single article put the oil "in the hands of the Government." The government still holds it, and so it holds the number on the pump.
So: a law with one sentence, a law with nine articles, and a court that declined to choose between them. Lay them next to the bakery wall and the Treasury account, and you will see that I have handed you three prices and one owner.
Clear a space on the table. You have three pieces of paper now and I want them in a row. On the left, the wall of a Tehran bakery, with a sangak loaf at 155,000 rials by order of the provincial authorities as of June 23, 2026. In the middle, Article 12 of a law of January 2010, which sends "all income sources resulting from implementation of this law into a special account titled subsidy targeting account with the General Treasury." On the right, a single sentence of March 1951 that put every operation of "exploration, extraction, and exploitation" of Iranian oil "in the hands of the Government." Three documents, seventy-five years apart. Look at them long enough and you notice they are not about bread, or cash, or oil. They are about who gets to set a number.
The bakery number is set by a provincial order. The pump number is set by the government's announcement. The cash number is announced by the government's spokeswoman and loaded onto a card. And the account in the middle was designed so the three would balance: raise the prices at home, collect the difference in one place at the Treasury, hand up to half of it back. On paper, a closed loop. Now, hold that thought, because the loop leaked from the first week, and the International Monetary Fund wrote down where.
The first leak is the order of operations. The cash had to arrive before the prices rose, or nobody would accept the prices. So, the IMF's 2014 review records, "the CBI opened a new credit line in September 2010 to finance the initial two-month worth of cash transfers to households." The central bank fronted the money. The second leak is the size. "The cash deficit of the TSO remained high at about 1–2 percent of GDP since its inception. The original plan envisaged that revenue from price increases would cover cash handouts and other payments under the TSR. Nonetheless, the reform started with a deficit." The third leak is the source. "With 75 percent of the TSO revenues coming from the sale of natural gas and gasoline," the review says, the organization "could not reach its revenue targets" when the gas company's big customers fell behind on their bills. And the fourth is the one I find most elegant: "Accounts of the TSO and legally required audit reports to the Parliament have not been made public, which has contributed to varying views on the causes and size of the deficit and how it was financed."
Read that last sentence slowly. The account that connects the bakery to the pump has a deficit, and the books that would show how the deficit was covered are not public. Here is how such a thing is built. One account, two doors. Through the front door come the price increases, in rials, from people buying fuel and paying power bills. Out the back door go the transfers, in rials, to every household that applied. When the front door brings in less than the back door pays out, somebody has to fill the gap, and the IMF tells you who did at the start: the central bank, on a credit line. After that the record goes dark.
So what does a household see, when the loop leaks? It sees the numbers it can read. In 2010, regular gasoline at "Rs1,000, Rs 4,000, and Rs 7,000 per liter, depending on whether the buyer used old quota, new quota, or purchased regular gasoline at the free market price." In September 2026, a liter above the monthly quota doubled "from 50,000 rials to 100,000 rials," the second gasoline increase since December. In January 2026, a cash credit tripled to 10 million rials, worth about $7 at that week's exchange rate, after the preferential dollar was withdrawn from every food staple but wheat. In June, the bread. Every time the account in the middle runs short, one of the numbers on either side of it moves, and the numbers on either side are the ones on the wall and the pump.
The clerk who drew this route wrote that "a shortfall anywhere shows up first at the bakery and the pump." I can't prove "first"; the audit that would show the order is not public. What the record does carry is simpler. There is one owner of the oil, written into law in 1951. There is one account for the subsidy, written into law in 2010. And the record shows both at once: an account that has run short since its first week, and an owner that keeps repricing at home, the pump in one column and the bakery wall in the next.
That is all I am going to say about the row of papers. I have shown you three prices set by one owner. I have not shown you how the owner keeps track of who has already had their share. The owner has an instrument for that.