The impact of oil crisis on Jordan

Ad Dustour’s Amer Shoubaki said that the negative effects of the collapse of prices of US oil futures for May delivery will be more than the positives for Jordan.

US oil closed trading on Monday at an unprecedented rate ever of -$37.63 per barrel, which means that traders have paid buyers to get rid of a commodity that flooded their reservoirs, said the writer, adding that trading on Tuesday for oil futures for June delivery started at $16 per barrel.

Jordan is affected by the COVID-19 lockdown, where the Kingdom’s daily loss due to the absence of taxes on selling fuel derivatives ranges between JD2 million and JD3 million, said the columnist.

The collapse of the West Texas Intermediate will reflect on the Brent, which, the latter, lost 17 per cent of its value, where the price of one barrel stood at $21, said the writer.

The Brent rate might drop further as markets approach oil futures for June delivery, which entails big losses to oil producing countries that include donors to Jordan, added the columnist. Moreover, the writer said that Gulf countries have reduced their budgets to be able to address the crisis, which forms a burden for Jordan to receive grants from these countries.

Gulf countries also host thousands of Jordanians who work there and are now threatened to lose their jobs and come back to the Kingdom, which will exacerbate domestic burdens, argued the columnist. As for the positives, Jordan can benefit from the historic drop in oil prices through filling up its strategic reserves, which would help reduce the oil bill over months to come, said the writer.

The collapse of oil rates would also contribute to maintaining the dollar reserves at the Central Bank of Jordan and enhance the purchase power of Jordanians for several months, Shoubaki said.