Due to Ukrainian War, Lebanon Might See Another Fuel Crisis
As the war in Ukraine continues, consequences of the conflict can be felt not only in the region, but also in other parts of the world. In Lebanon, for example, there is a risk that the Ukrainian war will trigger another fuel crisis.
Lebanon is already dealing with fuel shortages and hyperinflation but since last week the prices of fuel have been going up faster than before. As Lebanon is economically close to Ukraine, many worry that soon the country will soon face food insecurity and an even more serious electricity crisis.
Lebanon is still recovering from the last fuel crisis
A few months ago, Lebanon saw a severe fuel crisis that negatively affected the State’s ability to provide essential services, such as health care, to people.
‘The fuel and electricity shortages have forced Lebanon’s largest hospitals to reduce their activities. At the same time, public water supply and wastewater treatment systems that rely on fuel have cut back on their operations, leaving millions without access to water, and jeopardizing environmental and public health,’ UN reported.
During the summer months there was so little fuel available in the country that people had to stay in lines for hours, or sometimes even days, to fill their cars. Moreover, the government would only provide one or two hours of electricity a day so people became almost entirely reliant on private generators. But while hotels, restaurants, or those earning in dollars, could afford having a generator, many were sentenced to living with no power.
As the UN explains, the fuel crisis reached its peak when ‘the country’s chief electricity provider, Electricité du Liban (EDL), halted main power service lines to water authorities, affecting roughly four million people across the country.’
Blackouts became a norm in Lebanon and thousands of businesses had to close because they were unable to operate amid the energy crisis.
The situation improved slightly in recent months but last weekend Lebanon saw massive lines at gas stations around the country and people fear that things are about to worsen significantly soon.
Fuel prices in Lebanon are increasing
According to data published by the Lebanese Ministry of Energy and Water, current fuel prices are as follows:
Gasoline 95 octane: 397,000 LBP, an increase of 28,000 LPB
Gasoline 98 octane: 407,000 LBP, an increase of 28,000 LPB
Diesel Oil: 375,000 LBP, an increase of 41,000LPB
Gas Canister: 288,000 LBP, an increase of 15,000 LPB.
When the changes to fuel prices were announced, Lebanon witnessed long queues for fear of prices rising even more in the next few days.
Middle East Monitor reported that ‘After lifting fuel subsidies last summer, the Ministry of Energy issues a table of fuel prices twice a week, recording a decrease or a rise, according to two factors, the first is the exchange rate of the lira against the dollar, and the second is the global price of a barrel of oil.
Today, the price of a barrel of oil exceeds $110, and earlier this week it reached $138.
Minister of Energy and Water Walid Fayyad confirmed “gas is available in the local markets, and we are not in a crisis.”
In turn, President of the Association of Petroleum Importing Companies, Maroun Chammas, said: “The challenge before us today is to continue to secure the local markets with fuel without interruption.”
He added, “Lebanon imports large quantities of Russian oil, and today we are looking for alternative markets, such as the Gulf states or Turkey.’
While, for the time being, officials might be saying that Lebanon is not facing another fuel crisis, the situation is dynamic and everything can change soon. Hence, people are trying to get as much fuel as they can while it is still available and relatively affordable.
The war might trigger food security in Lebanon
In Lebanon, many people make an income by producing bread and other baked goods. Owning a bakery selling traditional manoushe, a type of Lebanese bread is very popular, and most people import wheat and cooking oil from abroad, including from Ukraine and Russia.
‘In 2020, Lebanon imported more than 630,000 tons from Ukraine, which represented 80 percent of its total imports. Russia supplied 15 percent of the remainder, while 5 percent came from other countries,’ Arab News explains.
Also, as said by the head of the Syndicate of Food Importers in Lebanon, Hani Bohsali, ‘Lebanon imports 100,000 tons of oils per year, 90,000 tons of which are sunflower oils, and 60 percent of sunflower oil comes from Ukraine, 30 percent from Russia, and 10 percent from Turkey, Egypt and Saudi Arabia. Ukraine is currently no longer exporting, while Russia may encounter problems with the SWIFT system, which will disrupt imports.’
With the war intensifying, the government and businesses across the country have to look for other ways to fulfill the demand for these products.
Arab News talked to some people affected by the problem who said:
‘We saw on social media that a new crisis is underway. We arrived at the supermarket to find people fighting over cooking oil and flour.
We do not trust the promises made by the ruling authority and we have previously run out of basic foodstuffs and medicines.’
People in Lebanon do not trust the government because of widespread corruption and politicians repeatedly trying to hide important information. They know that prices, as well as availability of commodities such as wheat and oil are linked to what is happening at global markets. So, even though the government denies it, they know that the Ukrainian war will have a negative impact on Lebanon and they are starting to prepare for the worst.
Other Middle Eastern countries will also be affected
Lebanon is not the only country in the Middle East that might be negatively affected by the war in Ukraine. As the Middle East Institute writes, ‘several MENA economies will be materially and negatively impacted by the conflict in Ukraine (e.g., Lebanon, Syria, Tunisia, and Yemen). These are the countries that primarily rely on Ukraine and/or Russia for their food imports, and particularly for wheat and cereals. The crisis is set to disrupt grain and oilseeds supply chains, increase food prices, and shoot up domestic production costs in agriculture. Reduced yields and incomes, especially for small-scale farmers, will have adverse implications for livelihoods and likely disproportionately affect those, among the poor and vulnerable, who are dependent on farming for their income.’
All these countries import various products from Ukraine and Russia. These are also countries that are already vulnerable. As the Middle East Institute explains, ‘the compounding shock of the war in Ukraine can cause tragic outcomes in some MENA countries if humanitarian and development assistance are not scaled up in 2022. To give a sense of the magnitude, at the regional level, consider that last year the MENA region accounted for only 6% of the world’s total population, but over 20% of the world’s acutely food insecure people.’
That is why stepping up the efforts to help these states prepare for changes to come is necessary to prevent people dying of starvation.