Sri Lanka increases fuel prices around 25% as Middle East tensions disrupt global oil supplies

Sri Lanka on Sunday raised fuel prices by around 25 per cent, marking the second increase within a week as the ongoing Middle East conflict continues to disrupt global energy markets, news agency PTI reported.The price revision, effective from midnight, comes as tensions triggered by joint US–Israel strikes on Iran and retaliatory action by Tehran have spread across the Gulf region, leading to the closure of the Strait of Hormuz — a key global energy transit route.According to official announcements, the price of auto diesel rose 26.1 per cent from Sri Lankan rupees (LKR) 303 to LKR 382 per litre, while super diesel increased 25.5 per cent from LKR 353 to LKR 443. Petrol 92 octane climbed 25.6 per cent from LKR 317 to LKR 398, petrol 95 octane rose 24.7 per cent from LKR 365 to LKR 455, and kerosene jumped 30.8 per cent from LKR 195 to LKR 255.This is the third fuel price hike since March 1 and comes as the conflict, which has unsettled global oil markets, entered its fourth week.With the latest revision, retail fuel prices in Sri Lanka are set to return close to levels seen during the 2022 economic crisis, when the country declared its first-ever sovereign default since independence in 1948. The unprecedented financial turmoil at the time forced then president Gotabaya Rajapaksa to resign amid widespread civil unrest.The steep increase has sparked concern among transport operators. Non-state bus owners warned that up to 90 per cent of their fleet could be taken off the roads unless fares are revised.“This is the biggest rise of diesel ever. We will not be able to operate buses without an adequate fare revision. We need a minimum 15 per cent fare hike to stay afloat,” Gamunu Wijeratne, chairman of the Lanka Private Bus Owners’ Association, told reporters.The association threatened a nationwide strike if authorities fail to announce a scheduled fare revision.Responding to the developments, the National Transport Commission (NTC) said the latest diesel price increase, when applied to its fare formula, translates into a rise of more than 10 per cent in current bus fares. NTC Director General Nilan Miranda said Cabinet approval is expected on Monday to implement revised fares, according to media reports.Private operators account for about 65–75 per cent of the island nation’s public transport fleet, while the state-run share stands at around 25–35 per cent.Three-wheeler taxi operators, many of whom use petrol vehicles dominated by India’s Bajaj brand, said the price of commonly used petrol had risen to nearly LKR 400 per litre.“Who would want to ride with us at this rate?” a three-wheeler driver said, as quoted news agency PTI.Apart from state-owned Ceylon Petroleum Corporation (CPC), fuel retailing in Sri Lanka is also carried out by Lanka IOC — a subsidiary of IndianOil –as well as China’s Sinopec and Australia’s United Petroleum. Following CPC’s decision, LIOC and Sinopec also revised their retail fuel prices, media reports said.Opposition leaders criticised the government’s tax policy, claiming that authorities collect about LKR 119 per litre of petrol and LKR 93 per litre of diesel in taxes. They demanded that these levies be scrapped to provide relief to consumers.Analysts warned that the fresh fuel price hike could push inflation higher by 5–8 per cent.Earlier, government spokesman and minister Nalinda Jayatissa said that despite the price revisions, the government continues to bear a monthly subsidy burden of around Rs 20 billion by subsidising diesel by Rs 100 per litre and petrol by Rs 20 per litre.He said that without the revision, the state would have faced an additional financial burden of approximately $1.5 billion. Jayatissa urged the public to consume electricity and fuel “mindfully” and warned against hoarding, calling on citizens to report any such attempts.