Economy

Fuel crisis worsens conditions in war-torn Yemen

By Nabil Abdullah al-Tamimi in Aden

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Oil derivatives are readily available for sale via black market transactions on the streets of Sanaa, even as gas stations are unable to meet demand. [Haitham Muhammad/Al-Mashareq]

There is a severe shortage of fuel in parts of Yemen controlled by the Iran-backed Houthis (Ansarallah), even as black market trading in oil derivatives thrives on the streets of Sanaa, where it often sells at double the official price.

Both sides have traded blame for the crippling shortage: The government accuses the Houthis of causing fuel shortages to boost their case for lifting restrictions imposed by the Arab coalition's blockade; while the Houthis accuse the Arab coalition of obstructing fuel shipments to hamstring them economically.

Meanwhile, it is the Yemeni people who suffer.

The fuel shortage has a knock-on effect that has worsened conditions in the war-torn and poverty-stricken country; threatening the water and electricity supply and heightening the risk of the spread of novel coronavirus (COVID-19).

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Houthi-controlled areas are seeing a surge in black market oil prices as a severe fuel shortage affects transportation and food prices. [Haitham Muhammad/Al-Mashareq]

Many Yemenis rely on groundwater extracted with pumps, while millions displaced by fighting and living in camps survive on water brought in by diesel-powered trucks, AFP reported.

Impact of fuel shortages

Oxfam's Yemen director Muhsin Siddiquey in June warned "a protracted fuel shortage could put millions at risk of both contracting coronavirus and water-borne diseases like cholera".

Shortages also have affected hospital operations, halted public transportation services and sent prices of essential goods soaring.

The continued lack of diesel threatens to force hospitals to suspend operations amid the coronavirus outbreak, said Dr. Nabil al-Najjar, deputy director of al-Sabeen Hospital in Sanaa.

"This would exacerbate the suffering of citizens and portend a humanitarian catastrophe," he told Al-Mashareq.

Sanaa bus driver Ali Ahmed told Al-Mashareq he waits "two days in line to get a limited amount of gasoline that is not enough for a full day of work".

"There is no benefit from working during this crisis, which has dragged on for too long," he said.

Yemen is a net food importer, and the shortage and high price of oil derivatives "has driven up transport costs" and thereby the cost of food, economist Abdul Jalil Hassan told Al-Mashareq.

It also has led to a rise in the price of agricultural products, he said, due to the high price of diesel fuel which is used to operate irrigation pumps.

In addition to the high price of oil derivatives, the price of food has been negatively impacted by the decline in the value of the Yemeni riyal, he said.

"The Houthis are indifferent and apathetic to the suffering of citizens in the areas under their control," he said, accusing them of deliberately "compounding the suffering through the blatant proliferation of the black market".

Black market boom

"The Houthis are manipulating the issue of oil derivatives and exploiting people's suffering to implement their plans," Deputy Minister of Human Rights Nabil Abdul Hafeez told Al-Mashareq.

"Houthi leaders are benefiting from trading in oil derivatives on the black market", he said, which is thriving owing to the abundant supply of oil derivatives that are being sold at prices that are more than double their official prices.

"The lack of derivatives at the stations encouraged us to bring them to Sanaa from adjacent provinces in 20-litre containers," said Hassan Majali, a black market dealer in Sanaa.

Transporting oil derivatives in small quantities like this facilitates its passage through the routes and checkpoints leading to the city, he told Al-Mashareq.

However, economist Abdul Aziz Thabet said the availability of oil derivatives in commercial quantities to black market sellers confirms "they did not come from outside Sanaa, because it is difficult to get these items through the military checkpoints along the routes to Sanaa".

Several incidents captured on video by members of the public and shared on social media show official fuel stations selling large quantities of oil derivatives to black market dealers, Thabet told Al-Mashareq.

The black market has more or less become the official market, he noted, owing to the abundance of oil derivatives available to purchase.

Suspicions of misappropriation

In a July 11th report, the Sanaa Centre for Strategic Studies said the Yemeni government, backed by the Arab coalition, suspended permission for fuel tankers to dock at al-Hodeidah in June after becoming suspicious of the Houthis.

"The Yemeni government made the move after becoming suspicious that the Houthis had withdrawn up to 45 billion Yemeni riyals from a 'special account' at the Central Bank of Yemen's al-Hodeidah branch, and misappropriated the funds by channeling them to the group's war effort," the report said.

According to the report, the account contained "months of fuel import taxes and customs fees". Per a UN-brokered November agreement between the Houthis and the government, these funds were earmarked to pay public sector employees in Houthi-controlled areas.

During a July 1st meeting with UN envoy to Yemen Martin Griffiths, Prime Minister Moeen Abdulmalik said the Houthis' failure to adhere to agreements brokered by the UN "is an attempt to return to the smuggling of Iranian fuel".

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