Bahrain and Oman have announced hikes in domestic gasoline prices as they look to mitigate the effects of low oil prices.
The change in gasoline prices in Bahrain will be effective from Tuesday while fuel prices in Oman will change from January 15.
According to a statement by Bahrain’s state news agency BNA, prices of super fuel in the country will rise from BHD 100 per litre to BHD 160 while regular fuel will be priced at BHD 125, up from 90.
Meanwhile, Oman News Agency reported that gasoline 95 octane will be priced at OMR 0.160 per litre while prices for octane 90 will be 0.140 rials per litre. Diesel will be priced at 0.140 per litre.
The two countries have been the worst hit in the Gulf by plunging oil prices, which have led to gaping budget deficits. They also lack the large fiscal reserves to fall back on of their Gulf Cooperation Council peers.
Welfare spending cuts are a sensitive step for Bahrain and Oman, which saw local protests demanding better economic conditions during the Arab Spring uprisings in 2011 . In the following years, other GCC members set up a $20bn fund to help both countries to create jobs and increase social stability.
But with brent crude hovering well below $40 per barrel, most Gulf countries have been forced to reassess their spending plans and cut subsidies to weather the cheap oil era.
A recent report by Arab Petroleum Investments Corporation predicted that energy prices across the GCC will increase further in coming years as regional governments adjust to lower oil revenues.
But it also warned the governments that higher energy prices could spur inflation in turn negatively affecting households. It urged Gulf governments to design schemes to compensate low-income households and also establish specialised funds to provide technical assistance and soft loans to help industries that are most affected.