The Ethiopian Ministry of Trade and Regional Integration has announced that the ongoing conflict in the Middle East is severely disrupting the nation's fuel supply chain, leading to a dramatic surge in procurement costs.
According to Dr. Kassahun Gofe, Minister of Trade and Regional Integration, Ethiopia’s reliance on fuel shipments passing through the Strait of Hormuz has left the country vulnerable to regional instability. The Strait, a critical maritime chokepoint that handles approximately 20% of the world's oil, has become a focal point of supply chain volatility.
"The conflict has created significant challenges for fuel supply," Dr. Kassahun stated. "Countries and companies that produce and refine crude oil have significantly reduced their operations, and suppliers who previously held long-term contracts with Ethiopia have been unable to fulfill their obligations due to the crisis."
As a result, Ethiopia has been forced to turn to the 'spot market' to secure fuel, a move that has proven to be extremely costly. The price of refined diesel has skyrocketed from $80 per barrel before the conflict to $230, while gasoline prices have more than doubled, rising from approximately $70 to $150 per barrel. The Ministry noted that over 180,000 metric tons of fuel previously contracted for delivery failed to reach Ethiopia due to the regional unrest.
To mitigate the impact on consumers, the Ethiopian government continues to provide massive subsidies. Currently, the government subsidizes diesel by 95 Birr per liter and gasoline by 42 Birr per liter. The total expenditure on fuel subsidies has reached 262 billion Birr, with the government currently spending between 15 and 20 billion Birr monthly. Officials noted that this monthly subsidy is equivalent to the cost of building 20 hospitals.
The supply shortage is most acute for diesel, which has seen a 50% reduction in availability. Daily supply has dropped from an average of 9.2 million liters to approximately 4.5 million liters. While gasoline supplies remain relatively stable, the government continues to navigate the complex challenges of securing energy resources in an increasingly volatile global market.
Source: Telegram / tikvahethiopia