The Jordanian government imposes a special tax on petroleum products, which represents a major contributor to public revenues. This tax is designed to ensure fiscal stability and support the state budget, alongside other tax revenues such as those collected from cigarettes and telecommunications services.

During the tenure of former Prime Minister Omar Razzaz, the government converted the special tax on petroleum derivatives from a percentage-based levy into a fixed, lump-sum amount. This shift means that the tax value is no longer directly affected by fluctuations in global oil prices, reflecting a policy approach aimed at reducing the impact of international market volatility on state revenues.

The tax burden on fuel products exceeds 53 percent of the base value across all categories, further exacerbating pressures on Jordanians whose incomes have been eroded following inflationary shocks linked to the COVID-19 pandemic, the Russia–Ukraine war, and subsequent regional conflicts, including the Gaza war and related geopolitical tensions.

Fuel taxation rates vary by product, with unleaded 90-octane gasoline taxed at around 121 percent per liter, 95-octane gasoline at approximately 182 percent, and kerosene and diesel at about 52 percent.

Pricing mechanism: a complex web of economic factors

Monthly fuel pricing in Jordan is determined through a complex process influenced by multiple domestic and international variables. The Fuel Pricing Committee at the Ministry of Energy and Mineral Resources conducts regular reviews to adjust prices accordingly.

Key determinants include global oil prices, which remain the primary driver of domestic fuel pricing as international markets are closely monitored and reflected in local adjustments. Additional costs such as import expenses, transportation, storage, insurance, and distribution within the Kingdom are also incorporated into final pricing.

A fixed tax component is added based on government policy, varying according to the type of fuel. In some cases, the government also provides direct or indirect subsidies to cushion the impact of global price increases. For instance, in the May 2026 pricing cycle, the government reportedly absorbed around 68 million dinars in subsidies for consumers, along with 2.9 million dinars for the industrial sector.

The government, meanwhile, maintains that fuel tax revenues are a vital source of public income, financing salaries, pensions, infrastructure projects, public services, and social protection programs. It also notes that most countries worldwide impose similar taxes on fuel, though under different structures and rates depending on national fiscal policies.

Experts warn of economic consequences

Former Minister of Labor and economist Dr. Maen Al-Qatamin warned of significant economic repercussions stemming from sharp increases in fuel prices. He said Jordan currently ranks among the highest globally in gasoline prices, driven by a combination of fixed taxes and rising international oil prices amid ongoing geopolitical tensions.

In a detailed interview with Radio Al-Balad, he described the rise of 90-octane gasoline to one Jordanian dinar per liter as “astonishing,” noting that some citizens are now spending at least 25 dinars on fuel for a single trip to Amman from governorates such as Tafilah, Aqaba, Irbid, or Mafraq.

He stressed that fuel taxes constitute a key revenue stream for the treasury, exceeding one billion dinars annually, making any reduction in them fiscally complex. He also warned that global oil prices are unlikely to return to previous levels in the foreseeable future due to long-term contracts and rising shipping and insurance costs.

He added that fuel price increases extend beyond transportation costs, affecting goods, food, and services, ultimately placing broader pressure on the cost of living.

Public finances and structural dependence

Al-Qatamin further highlighted a structural imbalance in public revenues, noting heavy reliance on fuel, tobacco, and telecommunications taxes, which together generate over two billion dinars annually. He argued that this structure leaves citizens exposed to global price shocks and limits fiscal flexibility, calling for greater reliance on productive, non-tax revenues.

Other economists describe fuel price liberalization as a “Pandora’s box” for the Jordanian economy. Economic analyst Fahmi Al-Katout argued that heavy taxation has increased production costs, weakened local competitiveness, and reduced purchasing power, contributing to broader economic strain.

He added that local taxes account for around 65 percent of domestic revenues, rising to nearly 79 percent when fees and licenses are included, most of which are borne by lower and middle-income groups.

Al-Katout also criticized fuel pricing policies as part of broader neoliberal economic frameworks, arguing they have deepened public debt dependence and weakened domestic production capacity.

Fuel price expectations remain tied to global energy market uncertainty, driven by geopolitical developments and supply chain disruptions. The final domestic price adjustment depends on average global prices during the monthly calculation period, in addition to logistics and insurance costs.

Current projections suggest diesel may rise by around 70 fils per liter to reach 860 fils, while 90-octane gasoline could increase by 60 fils to reach 1.06 dinars per liter, remaining below international pricing levels.