Gas shortages in Sanaa as black market thrives

While gas stations in Sanaa and other parts of Yemen under the control of the Iran-backed Houthis (Ansarallah) have been running short of fuel, the black market for oil derivatives has been thriving, local residents told Al-Mashareq.

Since April 8th, motorists have been waiting in long lines at gas stations to pump the limit of 40 litres per vehicle, Sanaa residents said.

Taxi driver Moussa Naji told Al-Mashareq he had waited at a gas station for two days in order to fill up his mini-bus "so I could go back to work and earn a living and feed my family, which depends on the income I make".

Naji said he was surprised when all the city's gas stations closed at the same time, while others refused to sell gasoline, despite its availability.

Gas station attendant Mohammed Saleh told Al-Mashareq his station sells fuel until it runs out.

"We work one day at the station then stop for at least one or two days until they distribute a new supply to the station," he said.

As a result of the fuel shortages, public transportation has been crowded as people have stopped driving their own vehicles, Sanaa residents said.

The gas shortages also have triggered a rise in the cost of food and other goods, as well as in the prices charged by private sector electricity providers.

Government calls for compliance

Yemen's economic committee has established a mechanism for the import of oil derivatives, and on April 9th demanded that traders and importers in Houthi-controlled areas operate via this mechanism.

Under the mechanism, the price of fuel is to be deposited with the Central Bank in Aden. This will enable lines of credit to be opened, and will help ensure permission is obtained for petroleum products to enter Yemeni ports.

This step aims to "prevent a decline in the value of the Yemeni riyal and return control of the banking functions to the banks instead of the black market", the economic committee said in a statement.

The move is designed to block the black market, which has been providing hard currency to traders to import oil derivatives in Houthi-controlled provinces.

In an earlier statement, issued March 12th, the economic committee said the Houthis were "creating an oil derivative crisis in order to boost the black market they run", thereby causing further deterioration in the humanitarian situation.

Preserving Yemeni riyal's value

"Tying the import of oil derivatives to the mechanism used by the Central Bank in Aden aims to preserve the value of the national currency," economist Abdul Aziz Thabet told Al-Mashareq.

"The import of oil derivatives in Houthi-controlled areas relied on the black market to supply the hard currency needed to import these oil derivatives, which led to an increase in demand for hard currency," he explained.

This led to prices surging to record levels of up to 800 riyals to the dollar late last year, he said.

The economic committee and the Central Bank in Aden "succeeded in stabilising the value of the riyal through the measures they imposed", Thabet said.

They "took it upon themselves to provide traders with the needed funds to import oil derivatives, which should ease the demand for hard currency in the black market", he said.

As a result of these measures, the value of the Yemeni riyal had risen to less than 500 riyals to the dollar by mid-April, he noted.

The non-compliance of oil derivative traders in Houthi-controlled provinces only "serves the Houthis' interest", Studies and Economic Media Centre head Mustafa Nasr told Al-Mashareq.

The black market boom in these areas "is condemning evidence" of this, he said.

The Houthis' failure to take action against black market activity "serves its interests --both through the importers affiliated with it, and through undercutting the decisions issued by the economic committee", he said.

Failure to comply with these decisions will compound the oil derivative crisis and prolong the humanitarian crisis in Yemen, he said.