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Yemenis have not been affected by a crisis since the beginning of the war in the country about seven years ago like the successive and swollen fuel crises from year to year throughout the years of conflict.
Sana'a and areas in northern Yemen under the control of Ansar Allah (Houthis) have been suffering of a renewed fuel crisis since the beginning of January of the current year 2022, after a period of stability in the availability of fuel although at a high price of more than 11,000 riyals per 20 liters.
Fuel shortage and price was one of the most significant causes of the fray that Yemen has entered since 2014, as the Ansar Allah group (Houthis) invoked the price approved by the Basindwa government in October of that year, an increase of one thousand riyals over the price of 20 liters of gasoline, rising its price from 2,000 riyals to 3,000 riyals – as a reason to overthrow state institutions, and this led to the outbreak of a devastating war since March 2015 up to date.
In fact, fuel crises have not stopped throughout the years of the war, to have increased in severity since the past two years and since the beginning of this year 2022, to contribute, along with other crises, to the explosion of the largest humanitarian crisis in the world, according to the classification of the United Nations.
Safwan Hamid, a farmer from Dhammar Governorate, confirms to “Khuyut” that the fuel crisis and the difficulty of obtaining diesel have greatly affected their farms and caused a decline in productivity and reduced arable areas, especially for grain, vegetables and fruits crops.
The manifestation of the fuel crisis has caused significant paralysis in the public transportation in Sana'a for instance; a large congestion of Sana’a University students is noticed as they leave the university heading home, waiting in crowds for the public transportation buses, the number of which has decreased dramatically, and the number of the working buses on the internal lines does not exceed the number of fingers.
Many female university students confirmed to Khuyut that they stood for hours waiting for a bus to arrive, and when one of them came, it would be very difficult to reach it due to the intense rush to get into the bus.
This situation forced many female and male students to walk on foot while returning to their homes after the end of their school day at the university.
Moreover, farmers and employees in Hadramout and other southern governorates, under the control of the internationally recognized government, are witnessing a very difficult living conditions due to the successive fuel crises that the governorate has experienced over the past year, with high gasoline and diesel prices and unaffordable transportation costs.
Fuel prices in Hadhramaut governorate, like other Yemeni governorates, have witnessed continuous upsurges since the middle of the year 2020, as one liter of gasoline jumped from 200 riyals in April 2020 to 370 riyals in February of this year at almost 200%.
Further, the fuel price hikes also continued to rise according to a decision issued by the Oil Company in Hadramout Governorate, to raise the price of one liter of gasoline provided by the company’s public stations to 600 riyals, with an estimated increase of about 300% in July of last year whereas the commercial price per liter of gasoline has increased to 750 riyals.
Import shipments
At the end of last year 2021, the internationally recognized government approved a new mechanism for purchasing oil derivatives and limiting the distribution and marketing of fuel through the Yemeni state oil company in Aden.
The decision aims to limit the distribution, marketing and sale of oil derivatives supplied in the local market to the Yemeni government oil company, and the process of purchasing fuel to cover the needs of the local market by qualified and approved companies and traders in accordance with the approved mechanism.
In this context, a large part of the conflict between the two parties to the war, Ansar Allah (Houthis) and the internationally recognized government has mainly focused on the economic aspect since the beginning of last year. A large proportion of this disagreement is focused on the fuel shipments coming to Yemen through the port of Hodeida in the west of the country, which, according to the accusations of the Sanaa government, is subject to close prolonged inspection in the port of Djibouti by the internationally recognized government and the coalition led by Saudi Arabia and the UAE, and therefore those ships are detained for periods ranging from one to two months and more, which largely causes fuel crises. However, this is denied by the internationally recognized government, which accuses Ansar Allah (Houthis) of exploiting this file and profiting from importing fuel and repudiating the agreements concluded in this regard, according to the Stockholm Agreement, which the United Nations is supervising its implementation, by looting fuel revenues and levies imposed by customs and taxes.
Ammar Salem, an internal transport bus driver in the capital Sana’a, talks to “Khuyut” about the tragic situation for internal transport drivers who have to stand in long queues in front of the operating fuel stations which they have not been witnessed over the past years, and the queue continues for days to obtain gasoline. This is the only option for them or buying from the black market with double price which reach up to 25 thousand riyals for one 20-liter gallon.
A large proportion of the deliberations that took place at the end of the year 2020 and the beginning of the year 2021, between the sponsors of international peace and the warrying parties in Yemen, in which the Sultanate of Oman joined as one of its main sponsors along with the United Nations, and Britain, focused on solving the fuel import crisis, according to the economic clause attached to the Stockholm Agreement. Considering that the repeated and successive fuel crises are one of the most important causes of the humanitarian and living crisis affecting Yemenis.
The latest statistics of the monthly report of the United Nations Verification and Inspection Mechanism indicates a decrease in the monthly average of the amount of fuel discharged until March 2021, by about 73%, to reach 38,309 tons, compared to a monthly average of about 142,221 tons in 2020, and it decreased by 78% to reach 180,339 tons compared to the monthly average since May 2016.
Diesel rose from 150 riyals / liter at the end of 2014 to reach 438 riyals / liter at the end of November 2019 with an increase of about 192% compared to the end of 2014. During the same period, oil prices rose from 158 riyals / liter to 379 riyals / liter, with an increase of 140%.
On the other hand, the price of cooking gas increased from 1925 riyals / per 18 kg cylinder at the end of 2014 to about 7800 riyals at the end of 2015, and at the end of 2019 the price of a cooking gas cylinder reached 4,685 riyals, with an increase of about 144% compared to the price in the end of 2014.
Economic researcher Ali Thabet Al-Samawi told "Khuyut", that the fuel crises have greatly increased the suffering of Yemenis, after the economic aspect turned into a card in the ongoing conflict in Yemen, as the recurring crises of the low supply of fuel, its high prices, and the restrictions imposed on its import led to a significant increase in its prices exceed the capabilities of most of the population in Yemen. Further, the fuel crisis led to the deterioration of living conditions and poor productivity of the industrial, agricultural and other productive sectors, and the rise in food prices by more than 200% as well as the increase in electricity costs which has became commercial after it was a government supported service provided at a low tariff.
The average fuel imports, according to navigational and statistical data revealed by a report issued by the Economic Studies and Forecasts Sector at the Ministry of Planning and International Cooperation, amounted to about 157 thousand tons per month during the period January 2018 - November 2019, which contributed to covering about 29% of the average domestic demand during the same period. Therefore, the demand gap advanced by 71%, or about 386 thousand tons per month on average, during the period January 2018 - November 2019, and this reflects the fact that the poor fuel supply is a major factor in the oil derivatives crisis in Yemen. Where the prices of diesel and oil are closely related to the abundance of supply, and for the purpose of providing foreign currency to importers of oil derivatives, the Central Bank in Aden implemented a number of banking and foreign transfer services for traders of oil derivatives through commercial banks, at prices lower than market prices for foreign currency.
These results indicate that the oil derivatives crisis is characterized by recurrence and synchronization of all types of oil derivatives in the same period, which doubles the suffering and negative impact on the various fixed and temporary income segments.
Economic repercussions
Price changes
The “Khuyut” platform has traced the price move and the changes it witnessed from year to year. In July 2014, the Basindowa government raised the price of a liter of gasoline from 125 riyals to 200 riyals per liter, and diesel to 195 riyals from 150 riyals per liter.
After the broke of the war, the authority of Ansar Allah (Houthis), which turned against the state institutions in Sanaa and seized them, floated the prices of fuel and disrupted the official bodies that import it, represented by the oil company, raising the price of a liter of diesel from 150 riyals to 520 riyals / liter at the end of 2015 to reach 438 riyals / liter at the end of November 2019, with an increase of 192%, compared to the end of 2014.
Oil prices rose from 200 riyals / liter at the end of 2014, to 379 riyals / liter at the end of November 2019, with an increase of 140 percent, estimated by a report issued by Economic Studies and Forecasts Sector at the Ministry of Planning and International Cooperation.
Since the beginning of 2020, the fuel crisis has intensified and became more necessary with the expansion of the black market that dominated the sale of fuel in most Yemeni cities, especially in the capital, Sana’a, which announced more than one official price during the years 2016, 2017 and 2018, to settle at filling stations at 7900 per gallon of 20 liters of gasoline. Moreover, the price of the 20-liter gallon of fuel in the black market has increased from 10 thousand riyals to 12 thousand, and then to 14 thousand and 16 thousand since the middle of last year.
Similarly, the price of domestic gas has also increased from 1,925 riyals / cylinder at the end of 2014, to 7,800 riyals at the end of 2015. At the end of November 2019, the price of a bottle / cylinder of domestic gas reached 4,685 riyals, an increase of 144% compared to the end of 2014. Additionally, the price has increased to 5 thousand riyals last year per cylinder, while its price exceeds 7,000 riyals on the black market. From the foregoing, it is clear that there are frequent crises in oil derivatives over the conflicting years, which have resulted in serious repercussions, exacerbating the suffering of Yemenis from time to time.
Most of the governorates witnessed repeated crises in the oil derivatives, diesel, petroleum and domestic gas. Official data show that diesel prices in October 2019 averaged 552 riyals / liter, and 8 governorates recorded levels above the average, the highest was in Al-Hodeida governorate at 889 riyals / liter, in Ibb governorate at 875 riyals / liter, and in the governorate of Ibb at 875 riyals / liter whereas in Dhamar 818 riyals / liter.
On the other hand, 10 governorates recorded levels below the average. The lowest was in Hadramout Al-Sahel at 325 riyals / liter, Hadramout Al-Wadi at 347 riyals / liter, and 375 riyals / liter in Al-Mahra governorate. The average price of diesel also increased by between 60%-2% in most Yemeni governorates at the end of the year 2019, and more than 70% in the past year 2020, while the highest increase was in Al-Hodeida governorate by 60%.
The average oil price has reached 491 riyals / liter since 2019, 7 governorates recorded a higher price than the average, the highest price was in Dhammar by about 788 riyals / liter while the average oil prices also increased by 36%-1% in most governorates.
The escalation of the oil derivatives crisis and its recurrence in the governorates, and the doubling of fuel prices by more than double the prices compared to the price before the conflict, puts additional burden on the normal living of the citizens as the prices tend to rise progressively for foodstuffs, transportation, and internal and inter-provincial transportation.
As for cooking gas, the average price of a gas cylinder reached 5033 riyals /per 18 kg package in October 2019, and 9 governorates were higher than the average price, while the highest price was in Dhammar governorate by about 8666 riyals / bottle.
With the escalation of the oil derivatives crisis since the end of August 2019, the supply situation is witnessing bottlenecks in the availability of fuel from diesel and petroleum, as it is available in a very small percentage in 12 out of 18 governorates, and is available to some extent in 6 governorates. On the other hand, domestic gas was almost non-existent in 9 out of 18 governorates, and it was available in 3 governorates, while it was available to some extent in 6 governorates. Thus, the oil derivatives crisis continues in a number of Yemeni cities, and has cast a shadow over the lives of citizens and various sectors that have been almost completely paralyzed due to the shortage of fuel.
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