AMMAN — As oil prices continue to skyrocket
worldwide, reaching a 10-year high this week amid
US and EU sanctions on Moscow
that have shaken energy sectors in the Middle East,
Jordan News spoke to
economists and energy experts about the effect of the Russia-Ukraine crisis on
Jordan, as higher oil prices would mean higher prices for essential goods
during dire economic conditions.
اضافة اعلان
Economist and
expert in oil and energy affairs Amer Al-Showbaki said that the world’s present
fuel and energy issue is either related to supply or to prices, ruling out that
Jordan would face a shortage of fuel derivatives unlike countries that solely
rely on
Russia for its oil imports.
“Ten percent of Jordan’s needs are met by Iraq, with
the balance coming from Saudi Arabia and the Gulf states, thus, it is unlikely
that we will face a shortage of oil derivatives in the near future,” said
Showbaki.
Showbaki
questioned the government’s ability to deal with an increase in oil prices if
the price of a barrel rises above $150 as the rest of the world predicts that
if
Europe and the
US impose sanctions on Russian oil exports, the price of a
barrel of oil could easily rise to $150 or even $200. Showbaki said that the hike could exceed the
$200 forecast, alluding to a statement by Russia’s Deputy Prime Minister, who
said that if the West decides to impose sanctions on Russian oil exports, oil
prices would soar up to $300.
According to
Showbaki, Jordan’s potential crisis “would be actually caused by the government
itself,” as it has become overly reliant on taxes from oil derivatives, which
already account for a third of the government’s tax earnings. He added that the government’s current
options are “to raise local prices and risk popular unrest, or incur additional
costs that may not be included in the budget plan, necessitating the creation
of an emergency budget to deal with these challenging events.”
Showbaki said that the
International Energy Agency recommends having a strategic stockpile of oil derivatives sufficient for 90
days, hence the government took advantage of the low oil prices in 2020 and
early 2021 to increase its strategic stockpile, especially since it relies
fully on oil imports. Nevertheless, he believes “that there is no reason to be
concerned about oil supplies, and that the major issue could only be the high
price.”
Hashem Aqel, another economist and energy expert,
said that it was initially thought that the
Russia-Ukraine crisis would not
take long, “but the assumptions proved wrong and prices will continue to climb
as long as the war continues.”
He emphasized that Jordanian
oil prices are tied to
global oil prices, and that if Russian oil is prohibited, Europe’s demand for
oil will rise, causing supplies to fall and prices to rise. He ruled out the
price of oil reaching $300, saying “that this is an exaggeration” because data shows
that Europe would not impose sanctions on
Russian oil and gas as 40 percent of
Europe’s energy is imported from Russia. This, he believes, “will be in
Jordan’s best interests, as well as the best interests of all countries that
rely on imported energy.”
Jordan’s
strategic stock is under no threat, believes Aqel, as neighboring countries
such as
Saudi Arabia and Iraq are key energy-producing countries. “It is unlikely for Jordan to face any
interruptions in oil derivatives, but a Jordanian citizen’s nightmare would be
a hike in prices.”
Another oil expert, Zuhair Sadiq has a different
viewpoint. He believes that the rise in
the price of oil derivatives, “although taking place globally, is not
justified.” He said the import process
is under fixed contracts for at least six months, implying that it is too early
for prices to start rising in Jordan. “We have become warlords,” he commented.
Sadiq noted that Jordan’s daily needs vary from 300
million to 350 million cubic feet, and that if the
Russia-Ukraine war continued, “it will bring
a calamity for a country like Jordan.”
Moreover, Sadiq added that the expiration of Jordan’s strategic
stockpile in two months “will be a bigger disaster because prices will rise in
a way that Jordanians will not be able to afford.”
Minister of Energy and Mineral Resources
Saleh Al-Kharabsheh stated on Monday during a weekly media forum, organized by the Centre for the
Protection and Freedom of Journalists in collaboration with Zain Company, that
Jordan’s strategic stockpile of fuel products is sufficient for 60 days. He
acknowledged the local increase in the prices of fuel derivatives, which drove
Prime Minister
Bisher Al-Khasawneh to direct the relevant authorities to
reassess the fixed fuel tax.
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