The third biggest OPEC producer, the United Arab Emirates (UAE), will link gasoline and diesel prices to global oil markets, starting next month, becoming the first country in the oil-rich Persian Gulf to remove transport fuel subsidies.

Fuel prices will be deregulated as from August 1, the Ministry of Energy said in a statement on Wednesday.

Diesel prices will also be linked to global markets, and are initially expected to decline, it said. Prices for both fuels will be announced on the 28th day of each month, the ministry said.

Gasoline is now subsidised in the UAE, the second biggest Arab economy and home to about 6 per cent of the world’s oil reserves. Unleaded gasoline 98 octane in the UAE sells for 1.83 dirhams (50 cents) a liter, according to prices on the ministry’s website.