The Ministry of Trade and Regional Integration (MoTRI) has announced its second major fuel price adjustment within a single month, a move that underscores the severe economic pressure Ethiopia is facing due to the ongoing geopolitical crisis in the Middle East and the closure of strategic maritime trade routes.
The most significant impact of this adjustment is seen in White Diesel—a critical resource for Ethiopia’s transport and construction sectors—which has seen a price hike of 16.6%. Consequently, the retail price of diesel, which stood at 139.84 ETB at the beginning of March, has surged by 23.25 ETB in just three weeks, reaching a new high of 163.09 ETB per liter.
In a detailed briefing, Kassahun Gofe, the Minister of Trade and Regional Integration, explained that the price volatility is directly linked to the conflict in the Middle East and instability in the Strait of Hormuz, a corridor responsible for 20% of the world’s crude oil consumption. The closure of this route has blocked the daily supply of approximately 140 million barrels of oil from major producers such as Saudi Arabia, Kuwait, and Iraq.
Ethiopia has become a direct casualty of this blockade. Currently, three massive vessels carrying a total of 120,000 metric tons of White Diesel and 60,000 metric tons of Jet Fuel are stranded in the Arabian Gulf.
This logistical crisis has forced the Ethiopian Petroleum Supply Enterprise (EPSE) to procure fuel from the “spot market” at exorbitant prices to prevent a total energy blackout. While Ethiopia’s long-term contract with Kuwait typically involves a premium of $9.25 per barrel, emergency purchases are now fetching premiums as high as $92.88—a ten-fold increase.
Despite the rise in retail prices, officials emphasized that the Federal Government continues to provide massive subsidies, with the total national fuel subsidy burden reaching 272 billion ETB. According to a Ministry spokesperson, without government intervention, the market price for White Diesel would have soared to 234.17 ETB, and Benzene ( petrol) to 174.40 ETB.
Currently, the state is still subsidizing 71 ETB per liter for diesel and 32 ETB for benzene. Even with these adjustments, Ethiopia’s fuel prices remain lower than those of neighboring countries when converted to US dollars. For instance, while Ethiopia’s diesel price stands at $1.032 per liter, Kenya and Djibouti are charging $1.374 and $1.741, respectively.
To manage the supply shortage, the government has moved beyond price adjustments to implement a “priority-based” distribution model managed by a specialized task force. U
