Sleeping in their cars outside petrol stations, Palestinians are feeling the pinch of a fuel crisis in the Hamas-controlled Gaza Strip, where black market gasoline sells for about $7.50 a litre.

Station owners, decrying Israel's reduction of shipments since Hamas took over the territory in June, and accusing the armed group of siphoning off fuel for its own use, declared a protest at the pumps this week.

The owners refused to accept fuel deliveries, prompting dozens of motorists to line up outside stations and in some cases to sleep in their vehicles in the hope of filling up before the pumps ran dry.

Taxi driver Zuhair Abu Shaban said he ran out of diesel nine days ago and had waited overnight outside a station for an opportunity to buy scarce fuel.

"This taxi is the source of living for us," said the father of 10, looking grim and exhausted.

Station owners and an Israeli official said Israel was supplying about 70,000 litres of petrol to the Gaza Strip each week. The owners estimated normal weekly consumption at around 840,000 litres.

About 800,000 litres of diesel fuel were coming in each week from Israel, the owners and the official said, with normal weekly use of about 2.1 million litres.

"No Fuel" read banners outside petrol stations across Gaza.

Black market

The shortfall has led to a flourishing black market in which a litre of petrol costs at least 27 shekels ($7.50)-four times the usual price, taxi drivers said.

Some of the contraband fuel was smuggled by Palestinian merchants through tunnels dug under the Gaza-Egypt border.

Israel, which pulled troops and settlers out of the Gaza Strip in 2005 but controls its frontiers, has said the territory's 1.5 million residents cannot expect to live normally while militants continue to fire rockets into the Jewish state.

Israeli leaders have pledged that cutbacks in its supply of goods would not lead to a humanitarian crisis, despite warnings of deepening Gaza hardship voiced by the United Nations and foreign aid groups.

Petrol station owners said that while Israel bore overall responsibility for shortages, Hamas was taking a cut of the fuel supplies before releasing the rest to the public. The Hamas government in Gaza denied it was keeping a significant quantity.

"Half of the usable fuels are confiscated by Hamas," said an Israeli official involved in coordinating shipments to the Gaza Strip. "We know this from Palestinian sources, mainly merchants and petrol station owners." A Hamas security official said fuel shortages meant the group's police force had sometimes to patrol streets on horseback or on foot.

Donkey sales are also up, after some taxi drivers sold their vehicles and bought carts to haul passengers.

Hundreds of taxi drivers have converted their engines to work on cooking gas, which some store owners also use to fuel generators during frequent power cuts.