Subsidized gasoline in Iran will be rationed from May 3 and each driver will have a right to purchase 60 liters per month, or nearly 16 gallons, at the current price of 7 cents per liter or 20 cents per gallon.
Less-subsidized gasoline will be available at prices three times higher, but still one-fifth of the price compared to neighboring countries, where each liter sells on average for one dollar.
The price difference has led to large-scale smuggling to other countries, draining government coffers. Some well-connected people have been accused of organizing large-scale smuggling.
Although Iran is an oil producing nation, it lacks sufficient refining capacity and has to import some of the gasoline it provides drivers. The country spends more than $40 billion on fuel subsidies a year and offers the cheapest gasoline.
In recent months, government officials had repeatedly warned of rationing gasoline and increasing the price.
With U.S. economic sanctions crippling the Iranian economy and impoverishing the government, prices of food and other necessities have skyrocketed, with inflation at 50 percent.
It was reported on April 30 that bread prices have suddenly jumped threefold. Food prices have risen more than 80 percent in one year.