Iran to scrap monthly petrol subsidy

Iran will scrap a petrol allowance from midnight on Tuesday as part of a 2010 plan to phase out subsidies on energy products and boost the economy, media reported.

Motorists will no longer to be entitled to buy 60 litres of petrol monthly at a reduced price of 7,000 rials (about 24 US cents) a litre, media reported.

The reports said a litre of standard petrol will retail at 10,000 rials (around 34 US cents) and super will cost 12,000 rials. Diesel will sell for 3,000 rials a litre. Iran last increased the cost of petrol in April 2014, when prices rocketed by 75 percent.

By removing the fuel subsidy, Iran, which is under a crippling international sanctions regime because of its disputed nuclear drive, hopes to help tackle its budget deficit. Iran approved its budget for the current fiscal year which began in March with oil accounting for just a quarter of revenues after a global fall in prices of crude.

The Islamic republic has the world's fourth largest oil reserves, and crude is its main source of foreign currency. But crude exports have fallen from more than 2.2 million barrels per day in 2011 to about 1.3 million bpd because of an oil embargo imposed by the United States and the European Union in response to its nuclear ambitions.