Despite global oil price fluctuation, energy crisis unlikely to hit Jordan

(File photo: Ameer Khalifeh/Jordan News)
AMMAN — Like the rest of the world, Jordan was affected by rising oil prices, but the Kingdom is unlikely to plunge into energy crisis, energy expert Amer Al-Shobaki said.اضافة اعلان

Recently, Jordan tried to prevent the skyrocketing oil prices internationally from affecting the local market. It raised the fuel prices by a marginal JD0.35 per liter.

The hikes are expected to continue in the next three months, as long as the price of oil remains above $100 per barrel, placing additional burdens on citizens and the Jordanian economy at large, including investments, Shobaki told Jordan News.

“Jordan’s passage through an energy crisis is unlikely in the near future,” he insisted. He explained that resource-barren Jordan will always have alternative markets for oil imports at acceptable prices from various Arab oil-exporting sources.

However, he recommended that the government must reduce the tax burdens slapped on oil derivatives to alleviate the burden of rising international prices on Jordanians.

“The government must make Jordanians aware of the gravity of the global economic situation by implementing austerity measures and announcing an emergency budget,” he suggested.

Citizens should also ration consumption, particularly in oil derivatives, so that they can absorb the increases, especially in the coming winter season, when prices are expected to go up further.

At the time, a liter of diesel, which now sells at JD0.615, is expected to hit JD1, “significantly straining the pockets of Jordanians”.

Another energy expert, Hashem Al-Aqel, agreed that Jordan is unlikely to face energy crisis.

“Jordan relies on Iraq for its import crude oil by land, and because Iraq has more oil than it needs, Jordan is unlikely to face difficulties obtaining it,” Aqel said.

Saudi Arabia is another important oil supplier to Jordan and imports are expected to continue, he added.

On oil derivatives, Aqel said there is sufficient quantity available on the international market and it is not expected that it would be depleted in the coming period, despite the repercussions of Russia’s war in Ukraine and the subsequent sanctions on Moscow, which resulted in global shortages of fuel, grain and other food supplies as well as fertilizer.

“Even if this happens, Saudi Arabia has a reliable surplus production of oil derivatives,” he said. But he added that he expected the price to be higher than usual because of the shortage and the increased demand.

“Jordan’s current problem is not the availability of supplies, but with the fluctuation in oil prices globally,” he pointed out. He said today’s prices are “beyond the bearing of many Jordanians”.

Internationally, prices jumped from 23 percent to 50 percent, but the increase locally was 3 to 5 percent.

“In any case, this is causing a decline in tax revenue for the state treasury,” and will lead to “significant losses” to the government.

He explained that the true cost of a gas cylinder is more than JD12, while it is sold domestically for only JD7 — a JD5 loss on each cylinder nationwide, where monthly consumption is estimated at 2.75 million cylinders.

“The same applies to other oil derivatives, which means that no tax revenue is generated for the state treasury,” he concluded.

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