TEHRAN — Demonstrations swept Iran this weekend as angry crowds protested the government's decision to raise gasoline prices.

The country's supreme leader Sunday backed the move to hike prices, labeling violent protests the acts of "thugs" as authorities shut down much of the internet and issued stark warnings in an effort to quell the sudden unrest.

At least one person was killed and hundreds arrested, according to state media, after clashes in cities across the Islamic Republic saw security forces fire tear gas and live ammunition.

Protesters set tires ablaze, looted and lit dozens of banks on fire, and abandoned their cars on highways to maximise disruption.

The country's capital, Tehran, was at a standstill late Saturday as the jammed roads combined with unseasonal snowfall.

Iranian protesters gather around a burning car during a demonstration against an increase in gasoline prices in the capital Tehran on Saturday. AFP - Getty Images

In an address aired by state television early Sunday, Ayatollah Ali Khamenei said that “some lost their lives and some places were destroyed,” without elaborating. He suggested protesters had been pushed into violence by counter-revolutionaries and foreign enemies of Iran.

“Setting a bank on fire is not an act done by our people. This is what criminals, thugs and hooligans do,” he added.

Crucially, Khamenei offered his support for the policy that set off the protests.

Under the new fuel measures decided on by President Hassan Rouhani's government, each motorist is allowed to buy petrol at a minimum $0.13 a litre, or about 50 cents a gallon. That's an increase of 50 percent from the day before.

A gallon of regular gasoline in the U.S. costs $2.60 by comparison.

Gasoline in the country is among the cheapest in the world, with Iranians heavily dependent on their cars.

Many make a living from driving or use it as a secondary source of income. Cars are also the main means of transport for most people, especially outside the cities.

Although there has been a plan to reduce subsidies and increase energy prices for some time, the timing of the price increase caught many by surprise.

Protesters in the central city of Shiraz block a road during a demonstration against an increase in gasoline prices on Saturday. - / AFP - Getty Images

Iran's economy has been struggling to overcome biting U.S. sanctions amid renewed tension between Washington and Tehran, with many among the country’s 80 million people suffering growing economic hardship.

Anti-government protests have also swept through other countries in the Middle East, including neighboring Iraq and Lebanon which are crucial to Tehran's influence throughout the region.

The U.S. so far has had a muted response to the protests, with Secretary of State Mike Pompeo tweeting overnight: “As I said to the people of Iran almost a year and a half ago: The United States is with you.”

The unrest had seemingly largely subsided Sunday after Khamenei's address.

The government has said it plans to use the money raised by the price increase for cash payments to low income households.

But first it set about attempting to put an end to the nascent protests.

Iranian news agencies published estimates of the number of demonstrators from Friday night, when the unrest began.

Most of the 90,000 or so received text messages warning them not to go out and protest again, according to state and semi-official news agencies.

The government, it said, had begun the process of identifying the drivers of the cars that had blocked roads in Tehran and cities throughout the country. They were set to be arrested.