Sri Lanka Increases Fuel Prices by 25% Amid US-Israel War on Iran

Fuel prices in Sri Lanka were raised by 25 percent on Sunday, marking the second increase in two weeks as the nation braces for further repercussions from the ongoing war in the Middle East.

Regular petrol was increased to 398 rupees ($1.30) per litre, up from 317 rupees, while diesel, commonly used for public transport, rose by 79 rupees to 382.

Last week, the government ordered an eight percent increase in retail fuel prices and introduced rationing to curb consumption.

“We hope to achieve a 15 to 20 percent reduction in fuel consumption with the latest increase,” an official at the Ceylon Petroleum Corporation said.

President Anura Kumara Dissanayake directed officials last week that the country must prepare for a prolonged conflict in the Middle East, which could affect energy supplies on the island.

The Strait of Hormuz, through which 20 percent of global oil exports pass during peacetime, has been effectively closed by Iran following the US and Israeli war against it, now entering its fourth week.

Sri Lanka imports all its oil and buys coal for electricity generation from Singapore, Malaysia, South Korea, and the Middle East.

The government has warned that the fighting in the Middle East, and a prolonged conflict, could seriously hamper efforts to recover from the economic meltdown of 2022. Sri Lanka defaulted on its $46 billion foreign debt in 2022 after running out of foreign exchange. Since then, Colombo has secured a $2.9 billion bailout from the International Monetary Fund.