Qatar to link fuel prices to global market
OREANDA-NEWS. Qatar will reform its fuel subsidy scheme by linking prices to the global market from 1 May, its energy ministry said today.
A committee charged with studying fuel prices has been formed, with responsibility for recommending adjustments to the prices of gasoline and diesel on a monthly basis.
Proposed prices will be based on a formula that accounts for "changes in the prices of petroleum products in the global market, and operational costs related to the production and distribution of fuel in the local market, as well as fuel prices in the countries of the region."
GCC oil exporting countries have come under economic stress as a result of lower oil prices over the last 19 months. Many countries, including Qatar, have a growing budget deficit that has seen their credit ratings either put into question or downgraded in recent months.
Subsidy reform has been a low-hanging fruit for the GCC countries to show signs of reform, but more drastic measures are needed to close budget gaps. Qatar has also shelved expensive investment plans aimed at boosting crude production.