Gulf countries cut fuel subsidies

(January 22, 2016)

Not all countries around the world reduced their fuel prices as crude oil prices declined. The cheap oil had a negative effect on the government budgets of many countries, including the Gulf countries that hold 30 percent of the global oil reserves and rely heavily on oil revenues. As oil prices fell to record lows, the governments took measures to reduce the pressure on their budgets by cutting fuel price subsidies. For the local drivers this means higher petrol prices.

Saudi Arabia moved first. In December 2015, it cut fuel subsidies and increased gasoline prices by 50 percent. Oman, Bahrain and Qatar followed suit and introduced new increased petroleum products prices in January 2016. Qatar and Oman raised their gasoline prices by 30 percent, while Bahrain introduced 60 percent higher gasoline prices.

In all these countries fuel prices usually remain unchanged for years. For example, in Oman the adjustment in January 2016 was the first in 10 years.

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