Iran's largest supplier of gasoline, independent oil trader Vitol, has decided to end its long-running contract to provide the country with the fuel from next year, an industry source said.

The source said Swiss-based Vitol has made the decision because it had made a loss of an estimated $70 million for the calendar year 2007 from its existing contract. The source did not mention any political considerations.

Iran is the world's fourth-largest crude oil exporter but its refineries are struggling to fully meet domestic demand.

Western sanctions mean it is hard for the country to develop refineries and the need to import the fuel could make it more vulnerable to pressure over its nuclear programme.

Trading sources have said Vitol has been the biggest gasoline supplier to Iran, handling about 60 per cent of the country's petrol imports.

Vitol's spokeswoman was not immediately available to comment. But a top Iranian oil official said the company was still selling petrol to the Islamic Republic.

'Vitol is still one of our suppliers, although they are not supplying as much as before due to rationing,' Hojjatollah Ghanimifard, international affairs director of the state owned National Iranian Oil Company (NIOC) said.

Tehran is striving to reduce the costly gasoline imports, mainly by rationing. It also subsidises all fuel sold at the pumps -- whether imported or not -- so drivers pay just 1,000 rials per litre.

The introduction of rationing in June helped reduce import volumes of the fuel to about 315,000 tonnes of gasoline for October and November, or 88,000 barrels per day, another industry source said in November.

That is about a 60 per cent cut from the pre-rationing level of 770,000 tonnes in June.

The industry source said it is not clear how or through which intermediary Iran would get alternative supplies to replace those handled by Vitol. India, the Netherlands, France and the UAE are traditionally Iran's primary suppliers.

Earlier this month, Iran's oil minister, Gholamhossein Nozari, said Tehran would soon increase the monthly gasoline quota for private drivers to 120 litres from 100 litres.

Another official said Iran would end rationing by March 2009 and would boost production from domestic refineries.Reuters