In a statement released late Wednesday, the trade ministry said that in order to ensure that "our retail prices reflect the international market, a new oil price starting September 28 (midnight) has been implemented."
It added that it would revise the price every three months in line with "our country's current economic situation and the state of the oil market."
The government began to phase out subsidies for petroleum products in July, imposing an initial hike of 30-40% on petrol and diesel, with drivers reporting severe shortages and long queues at petrol stations.
Under the new measures, the price of diesel was up by 22% to 59.90 birr ($1.13), while the price of petrol rose nearly 20 percent to 57.05 birr, the ministry said.
The Horn of Africa country of more than 110 million people has seen inflation hovering at 30-35% over the past several months, with the Russian invasion of Ukraine causing prices of basic items to soar.
The global surge in prices for basic goods has also eaten into the foreign exchange reserves of the largely importing nation.