Oil and fuel prices are rising in Oman, since January 2016. At the pump today, an Omani resident will notice up to a 50% increase in the price of petrol. So how come fuel prices higher compared to a year ago, when oil price is so low?
Rising Oman Fuel Price
|Fuel Grade||Octane||Subsidized price/liter OMR||Apr 2016 price/liter OMR||May 2016 price/liter OMR||Jun 2016 price/liter OMR||Jul 2016 price/liter OMR||% Increase|
The answer is simple, Subsidies! Or, lack there of in this case.
In January 2016, Oman eliminated its fuel subsidies, effectively making the price of petrol subject to the cost of oil in the market. So, why has Oman done something so drastic?
Oman’s economy is based on oil and the sale of it to other nations. With the dramatic decrease of the oil price in the market over the last two years, Oman has been left with a large budget deficit. Unfortunately, the rumor is Oman needs the price of oil around $80 in order just to break even with the budget.
Looking toward recent history, in 2014 Oman posted a one billion OMR deficit, and in 2015 a 4.6 billion OMR deficit. Both well above the Central Bank of Oman’s initial estimates. In order to keep Oman afloat during this dip in oil price, Oman implemented a host of adjustments to include spending cuts, augmenting non-oil revenues, and subsidy reform. With that said, a deficit of 3.3 billion OMR will stand in 2016 if the price of oil stays low.
Oman spent close to one billion OMR on subsidies in 2015, so one can clearly see the potential savings the government hopes to gain with subsidy reform. No matter how you look at it, the government needs to balance its budget. Eliminating fuel subsidies offers an instant savings.
To a traveler visiting Oman, you won’t notice the higher petrol price much. In fact, compared to your home country, you will probably be surprised how cheap the price of petrol is in Oman. The sultanate sits 11th on the global cheapest fuel list, perfect for filling the tank on your rented Land Cruiser.
Looking to the future, travelers and residents should expect fuel prices in Oman to rise along with the rising price of oil.
How much per liter do you pay for petrol in your come country? Let me know. Leave me a comment below:
“Annual Report 2014.” Central Bank of Oman. June 2015. Web. <http://www.cbo-oman.org/annual/CBOAnnualReport2014ENG.pdf>
“Annual Report 2015.” Central Bank of Oman. June 2016. Web. <http://www.cbo-oman.org/annual/Annual_Report_2015.pdf>
“Fuel Prices at Pumps in Oman ‘will Not’ Be Capped.” Times of Oman. 29 Mar. 2016. Web. <http://timesofoman.com/article/80483/Oman/Government/Fuel-prices-at-pumps-in-Oman-‘will-not’-be-capped>
“Cut in Fuel Subsidy to Earn Oman Additional OMR162m.” Times of Oman. 22 Jan. 2016. Web. 24 July 2016. <http://timesofoman.com/article/75964/Oman/Government/Oman-could-earn-an-extra-OMR162m-per-annum-from-the-latest-fuel-price-hike>
“Oman Gasoline Prices, Liter.” Oman Gasoline Prices, 18-Jul-2016. GlobalPetrolPrices.com. 18 July 2016. Web. <http://www.globalpetrolprices.com/Oman/gasoline_prices/>