Raad Mahmoud Al-Tal

With the growing military escalation in the region and increasing uncertainty in global markets, it has become necessary to think about practical steps to protect the Jordanian economy. The most important areas that need attention are energy, food security, and supply chains. Economies that are able to withstand crises are usually those that prepare early and plan for unexpected situations.

The first priority is the energy and electricity sector. Jordan depends heavily on imported fuel, which makes this sector very sensitive to regional disruptions. Estimates show that the liquefied natural gas reserves in Aqaba would only cover a short period if supplies were interrupted. If the crisis continues, Jordan may have to buy gas from global spot markets at much higher prices.

Specialists estimate that this situation could put direct pressure on the public budget. Government losses could reach about 5.6 million dollars per day, which is nearly 170 million dollars per month, if LNG prices remain around 24 dollars per million British thermal units. If electricity generation shifts to diesel instead of gas, the cost would be even higher. This highlights the importance of developing local energy sources. Oil shale power plants and renewable energy projects can help reduce reliance on imported fuel. Increasing the strategic reserves of gas and fuel and expanding storage capacity in Aqaba are also important steps.

The second priority is food security and supply chains. Stable food supply is a key part of economic stability. Jordan currently has wheat and barley reserves that can cover 10 to 12 months of consumption. In addition, basic food commodities are available for more than six months. This provides an important safety buffer if global trade is disrupted.

Jordan also benefits from diversified import routes. Most imports arrive through the Red Sea, and land transportation routes are also used. This reduces direct dependence on the Strait of Hormuz. However, if the conflict continues for a long time, transportation and insurance costs could increase. Some estimates suggest that shipping costs through the Red Sea and Bab al-Mandeb could rise by as much as 50 percent if tensions last more than a month.

To deal with this risk, it is important to strengthen flexible logistics planning that connects sea and land transport. Expanding the network of international suppliers and maintaining strong strategic reserves are also necessary. Supporting local agriculture and food industries can reduce dependence on imports. Jordan still imports basic food products worth 4 to 5 billion dollars each year, which makes strengthening domestic production an important priority.

The third priority is preparing for inflation shocks. Global tensions often lead to higher energy prices and rising inflation. The Managing Director of the International Monetary Fund warned that every 10 percent increase in oil prices could raise global inflation by about 40 basis points.

If oil prices rise above 120 dollars per barrel, especially if shipping through the Strait of Hormuz is disrupted, global prices for energy and goods could increase significantly. For Jordan, this could raise energy costs by 20 to 30 percent, putting pressure on the national budget and increasing production costs for businesses.

The Jordanian economy still has a reasonable level of resilience because of its strategic reserves and diversified trade routes. However, the current regional tensions require quick action. Strengthening domestic energy sources, expanding strategic reserves, diversifying supply chains, and supporting local production are all important steps. The more the economy relies on its own resources, the better it will be able to withstand future shocks.