Jordan: Between the Hammer and the Anvil

What happened: The Iran war and Hormuz crisis are placing Jordan under added fiscal strain, forcing authorities to seek creative solutions.

Why it matters: Regional partnerships have helped the Kingdom weather the immediate crisis. Over the medium term, Jordan is banking on accelerated development of the Risha gas field to bolster its energy security, potentially freeing it from Israeli imports.

What happens next: Enhanced energy security and integration with regional infrastructure point to a sunny future for the Kingdom — if it can overcome the present crisis.

The Iran conflict and ongoing Hormuz crisis have placed Jordan, with its heavy reliance on imported energy, under substantial strain by constricting available import volumes and raising prices.

Early in the war, Iranian strikes threatened energy infrastructure and disrupted pipeline gas flows from Israel. While that disruption lasted "only" through the war's intense early weeks, the slowdown in active conflict has brought only limited relief. Qatari LNG, for which Jordan had just signed a new import contract in January, remains entirely offline.

Contending with its own energy crisis, Egypt has also been less willing to share gas or the neighbors' joint regasification infrastructure. (A Jordanian regas facility, being built with Kuwaiti funds, will not be ready until late 2026 at the earliest.)

On the cost front, surging oil and gas prices amid the Hormuz shutdown have substantially raised Jordan's import bills for fuel and LNG, adding a major burden onto state finances. Energy and Minerals Regulatory Commission (EMRC) Chairman Ziad Al Saaydeh (see Featured Personality) estimates that the surge in oil and gas prices has increased Jordan's power generation costs by approximately $140mn per month. Prime Minister Jafar Hassan has imposed strict spending controls across government, aiming to curb budget pressures as Jordan weathers an energy crisis of uncertain duration.

Slim Cushion

The crisis has forced Energy Minister Saleh Al Kharabsheh and his staff to pursue creative solutions to shore up Jordan's fragile energy security.

When Israel shut-in Leviathan gas supplies at the start of the war, Jordan’s National Electric Power Company (Nepco) activated its emergency plans and switched to liquid fuels for power generation, tapping strategic diesel and fuel oil stocks. With 30 days' worth of stocks, Nepco was able to weather the 4.5-week shut-off.

Kharabsheh reassured Jordanians that strategic reserves of all petroleum products were sufficient for 30 to 60 days at normal consumption rates – though consumption will rise as summer sets in.

Neighborly Ties Pay Off in Crisis

Jordanian and Iraqi leaders' investment in building strong bilateral ties has paid off for both countries during this crisis. Iraq has allowed Jordan to import crude oil at a $16 discount relative to the monthly Brent crude benchmark. In exchange, Jordan has sent electricity to Iraq and reduced fees for goods transiting Aqaba port by 75%.

Last week, Jordan temporarily took over Iraq's nine-month lease for the Excelerate Acadia FSRU, which the Hormuz closure is preventing Iraq from using. (The Acadia will replace the Energos Force FSRU, scheduled to leave Aqaba in June.) Officials in Amman have called the wartime partnership "an exemplary model for economic cooperation."

Kharabsheh has also been maintaining regular dialogue with his Egyptian and Algerian counterparts, seeking to secure alternatives to the Qatari LNG that was lost. Talks with his Algerian counterpart, Mohamed Arkab, began in mid-April but have yet to yield a deal, partly because Mediterranean spot prices are running at several multiples of the $6/mmBtu Jordan pays for Israeli pipeline gas.

The crisis has also facilitated regional efforts to build future resilience, with Jordan playing an active role. In April, the government signed a $2.3bn agreement with the UAE to develop Jordan’s railway networks, under a plan that will make Aqaba a key node in an integrated Arabian rail network. Jordan has also launched formal cross-border rail studies with Saudi Arabia and Syria under the plan. The railway holds promise to boost Jordan’s mining sector and make the Kingdom a key link in transit corridors connecting the Gulf and Europe while bypassing the Hormuz chokepoint.

Diversification Plans Paying Off

For the last two decades, Jordan has invested in energy diversification to reduce single-source vulnerability. Its energy strategy emphasizes diversified crude sources, expanding LNG imports through Aqaba, and increasing production from the Risha gas field in the northeastern part of the country, near the border with Iraq.

Risha has seen a substantial acceleration last year as the Energy Ministry sought to capitalize on a favorable 2024 reappraisal of the field's reserve levels. Production, then just 75mn cfd, was set to reach 418mn cfd by 2030. According to the EMRC's Al Saaydeh, efforts to fast-track that timeline have pushed output to 90mn cfd today. He now expects the country to reach self-sufficiency in gas by 2029 – six years before its current gas offtake deal with Israel is set to end.

Along with its ongoing investments in expanding renewable energy capacity, the accelerated Risha development could allow Jordan to end, or substantially reduce, politically unpopular Israeli imports. Alternatively, as domestic production rises, Jordan could begin steering surplus volumes to neighboring Syria and Egypt, both of which are keen to receive any available supply.

Whatever leaders in Amman decide, Jordan's energy security appears far more robust in the medium term than it does amid the present crisis. Their challenge today is to survive the war's fiscal burden in order to reach that rosier future.