ACAPS Thematic report – Yemen: Al Hodeidah fuel import and fuel price modelling, 04 April 2022 – Yemen
Since March 2019, there have been five major disruptions at the port of Al Hodeidah, which have reduced fuel imports to Al Hodeidah by an average of 70%.
In June 2020, the internationally recognized government of Yemen (IRG) suspended fuel imports through the port of Al Hodeidah. Except for a brief three-month hiatus between October and December 2020, the WRI has since allowed only limited and occasional commercial imports of fuel through Al Hodeidah.
In April 2022, the DFA and the Saudi-led coalition agreed to a two-month national truce (Reuters 01/04/2022). The agreement provides permission for oil tankers to enter the port of Al Hodeidah and provides a key opportunity for the reduction of commercial fuel prices in areas controlled by DFA.
The reduction in direct commercial fuel imports via Al Hodeidah has not resulted in fuel shortages in areas under the control of the De Facto Authority (DFA) in northern Yemen (also known as the Houthis), even though the port supplied nearly half of the country’s monthly fuel import volumes. Fuel shortages are often caused by managed rationing in DFA areas rather than reduced availability. National supply chains have been able to quickly adapt to trucking fuel from non-DFA areas in order to access the more lucrative market in DFA areas. WRI’s strategy and market response has resulted in recurring disruptions to local fuel supply in WRI areas.
WRI continues to benefit financially from additional fuel import taxes and customs duties applied to increased fuel volumes entering through seaports located in non-DFA areas, namely Aden and Mukalla. Meanwhile, the DFA generates revenue through customs fees that would normally be applied in Al Hodeidah, but are now applied to tankers entering DFA areas by land, in addition to revenue generated from sales. of fuel on the internal market.
The current crisis in Ukraine has had a significant impact on international oil prices. The fuel price modeling in this report takes into account the international price of oil, but the figures may vary according to price fluctuations. Regardless of international oil price fluctuations, fuel disruptions at Hodeidah Port have a significant impact on fuel prices in the commercial DFA market.