Iran has announced it will cut the volume of its cheap petrol ration by 25% to 60 litres per vehicle per month from 21 March.Currently, each vehicle is allowed a quota of 80 litres of fuel at 10 cents a litre, with any amount needed on top of that priced at 40 cents. That compares to a UK price that has been averaging £1.12 a litre ($1.68) and is forecast to reach £1.20.
The Financial Times said last week the energy trading company, Vitol, and its fellow trading giants Glencore and Trafigura, had stopped supplying petrol to Iran after increased pressure from the United States.
General Mohammad Rouyanian of Iran's fuel management committee told local agencies the new rationing was for three months only but it could be reduced further if needed. Iran's oil ministry has pledged to increase domestic petrol production by 13m litres a day to counter any future sanctions.
Iran consumes around 65m litres of petrol a day, one third of which is imported. Iran heavily subsidises energy and food - although that is a policy due to change in the next fiscal year.
Iran's parliament this week approved a budget bill set to remove $20bn worth of subsidies - the revenue-starved government of President Mahmoud Ahmadinejad had wanted a cut of twice that amount. Iranian MPs say they fear further removal of subsidies would triple the country's inflation - which has only recently fallen to 11.3%.