Crude cushion

Finance and the Public Service Minister Fayval Williams has sought to allay fears that rising oil prices on the global market would affect Jamaica’s ability to import the essential product, arguing yesterday that the country has strong Net International Reserves (NIR) covering 36 weeks of imports.

The spike in oil prices has been triggered by the conflict in the Middle East, which has escalated significantly since the United States (US) and Israel launched joint airstrikes on Iran on February 28. Iran, in turn, has launched attacks on several Middle East states it views as assisting the US by hosting American military bases or otherwise.

Making her opening presentation in the 2026-2027 Budget Debate in the House of Representatives yesterday, Williams said Jamaica had built up a strong NIR of US$6.8 billion.

“I say to the people of Jamaica, you have our assurance that no matter to what level the price of a barrel of oil goes, this Government has the leadership capability to lead Jamaica safely through any storm, oil price increase, or any other geo-political issues that come our way,” Williams said.

However, the minister did not indicate any specific measures to ease a possible spike in the price of petrol on the local market.

OIL PRICE INCREASE

The price of crude oil soared to US$120 a barrel on Monday and energy analysts have noted that fears that the conflict could spread across the Middle East – a region responsible for a large share of the world’s oil production – have pushed traders to factor in supply risks. As a result, benchmark oil prices such as Brent Crude have risen as investors anticipate potential disruptions to production, transport routes, or export facilities.

Of particular concern has been the Strait of Hormuz, one of the world’s most critical oil shipping routes, through which roughly a fifth of global petroleum supplies pass each day. Any escalation that threatens shipping in the narrow waterway could significantly tighten global supply and push prices higher. Market uncertainty has also led major producers within OPEC to closely monitor the situation as prolonged instability in the region could influence production decisions and further affect fuel prices worldwide.

Yesterday, however, crude prices fell to about US$90 a barrel after US President Donald Trump said the war in Iran was “very complete, pretty much”.

Amin Nasser, the head of Aramco, Saudi Arabia’s largest oil exporter, warned yesterday of catastrophic consequences if the Straight of Hormuz remains blocked.

Arguing that the Budget was being presented amid a serious war that has sent oil prices soaring, Williams said Jamaica imports 100 per cent of oil either as crude, which the state-owned oil refinery, Petrojam, refines, or as finished products.

She said Petrojam projects its sales target at 12.22 million barrels for 2026. Additionally, other suppliers import millions of barrels of oil for the local market.

The finance minister said the Government has worked to ensure that the NIR remained strong to protect Jamaica against “the vagaries of the external world. One such is the significant sudden movement in oil prices”.

Noting that the NIR is one of Jamaica’s important buffers, Williams said that that is why “we should not party with the rent money”.

Williams also said the 2026-2027 Budget was being presented a little more than four months after Hurricane Melissa, a Category 5 storm, devastated the western end of the country.

She said the last tally of damage and loss to the country amounted to US$12.2 billion or 56.7 per cent of the 2024 GDP.

editorial@gleanerjm.com