Qatar will allow its domestic gasoline and diesel prices to fluctuate in response to changes in global markets as it seeks to reduce waste of fuel and save money for the state budget.

Currently, local fuel prices are fixed at low levels, requiring the government to spend on subsidies to keep them down. From next month, prices will fluctuate monthly, the official Qatar News Agency (QNA) said on Tuesday.

Future prices will be based on a formula that includes global levels, production and distribution costs within Qatar, and prices elsewhere in the region, QNA said without giving further details of the formula.

Qatar's state budget has been strained as low international oil and gas prices have slashed its export revenues, so it has been looking for ways to save money.

In January the government raised domestic prices of gasoline by 30 percent, but at QR1.30 ($0.357) per litre, the price of Super 97-Octane gasoline remained among the lowest in the world, encouraging a preference among drivers for huge sports utility vehicles.

Sheikh Mishaal bin Jabor al-Thani, chairman of a government-led commission studying the issue, told QNA on Tuesday that the new system would not necessarily mean higher domestic prices, but that they could now rise and fall when global levels moved.

Other Gulf countries have implemented or are considering such a reform as low oil prices pressure their finances; the United Arab Emirates moved to a similar formula for domestic fuel prices last year. – Reuters