ENERGY

Bahrain, Oman cut petrol subsidies as oil hits 12-year low

Drivers wait in line to fill their vehicles at a petrol station in Budaiya, Bahrain, January 11, 2016. (Reuters)

Bahrain and Oman are the latest GCC countries to reduce state subsidies on petrol as global oil prices dips to its lowest since 2003.

On Tuesday, gas prices at the pump rose by up to 60 percent in Bahrain, to $1.25 per gallon for regular petrol and $1.60 per gallon for premium fuel.

Oman said it would reduce subsidies starting on Friday and increase gasoline prices by 33 percent for premium fuel and 23 percent for regular fuel.

The dip in prices has cut into the revenues of oil-exporting countries, including many Gulf states. To save on expenditures, the United Arab Emirates and Saudi Arabia reduced fuel subsidies last year. Qatar and Kuwait are expected to follow suit.

As soon as news of the hike in petrol prices were announced, many drivers could be seen queuing up for up to hours at gas stations across the country in a bid to fill up their vehicles.

“Bahrainis have been going crazy over the price rise and some have been filling tanks and empty bottles to either re-sell or use later. Everyone is going hysterical, even though those who are pretty well off,” Hady Elcott told Al Arabiya News.

Speaking to Al Arabiya News from Manama, program director at Bahrain's Center for Strategic, International and Energy Studies Omar al-Ubaydli told Al Arabiya News that while in the short term Bahraini citizens will feel the pinch, economic reforms are much needed during the current climate.

“The GCC subsidy system needs to be reformed because it is not serving its purpose: it is an ineffective and very expensive way of redistributing to the poor, and with declining oil prices, all the GCC countries will reform their subsidies. In this sense, it is an unsurprising development,” Ubaydli said.

While many voiced their frustration at not being told well in advance of the pending changes in petrol prices, Elcott contended that it was probably for the best economically.

“Maybe now is the time to maybe change spending habits, re-budget etc. The youth are obviously frustrated, but that's just normal. The culture and mentality should change now with the rise of prices,” he said.

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Last Update: Friday, 15 January 2016 KSA 14:41 - GMT 11:41
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Bahrain, Oman cut petrol subsidies as oil hits 12-year low
The dip in prices has cut into the revenues of oil-exporting countries, including many Gulf states
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