Bahrain, Oman cut gas subsidies as oil hits 12-year low

Bahrain and Oman on Tuesday reduced government subsidies on gasoline, becoming the latest Gulf Arab countries to try to cut back on spending and offset the effect of oil prices, which have fallen to their lowest level since 2003.

On Tuesday, gas prices at the pump rose by up to 60 percent in Bahrain, climbing to $1.25 per gallon for regular gasoline and $1.60 per gallon for premium fuel. Hundreds of people lined up at gas stations a day earlier to fill their cars before the higher prices went into effect.

The tiny island-nation in the Gulf ended subsidies on meat and poultry in October, increasing consumer prices between three and four-fold. Bahrain plans to make further cuts in electricity and water subsidies in March.

Earlier this month, Bahrain cut government subsidies for diesel and kerosene. 

Meanwhile, Oman said it would reduce gasoline subsidies starting Friday, with prices set to rise by 33 percent for premium fuel and 23 percent for regular fuel.

The moves come as crude prices closed Monday at $31.41 a barrel on the New York Mercantile Exchange — the lowest in 12 years.

The dip in global oil prices has cut into the revenues of oil-exporting countries, including many Gulf Arab states where citizens have become accustomed to generous government subsidies and state handouts.

Saudi Arabia in December raised petrol prices by 50 percent as part of subsidy cuts for petroleum products, power and water, after the country posted a record $98 billion budget deficit for 2015.

The United Arab Emirates has liberalized fuel prices, while Kuwait lifted subsidies on diesel and kerosene from the start of 2015.

Wire services