The Ceylon Petroleum Corporation (CPC) has announced that it is preparing to implement necessary measures should an oil crisis arise in Sri Lanka due to the ongoing geopolitical tensions. This statement comes as instability in the Middle East continues to impact global fuel markets.
Recent developments include Iran’s attempts to close the strategically vital Strait of Hormuz following a U.S. military strike. The Strait of Hormuz is a critical chokepoint in global oil transportation, with approximately one-sixth of the world’s daily oil shipments—about 17.2 million barrels—passing through this narrow passage. This route connects the Persian Gulf, responsible for around 20% of global oil exports, to the open ocean. Key oil-exporting countries such as Saudi Arabia, Iran, and the United Arab Emirates rely heavily on this route for their exports.
In response to the escalating tensions, global fuel prices surged, with the price of Brent crude rising by 3% to approximately $79 per barrel. Market analysts warn that oil prices could continue to climb if the situation worsens.
When questioned about the potential impact on Sri Lanka’s domestic fuel prices, the CPC assured that there will be no immediate changes. However, the corporation is actively developing contingency plans to mitigate any future disruptions. These include testing oil samples from alternative sources such as Nigeria, aiming to secure supply chains if traditional routes are compromised.
The CPC also cautioned that the effects of the global oil crisis may be more prominently felt in Sri Lanka during August and September.
Economic experts have emphasized the urgency for the government to proactively address the potential fallout. Professor Priyanga Dunusinghe of the University of Colombo’s Department of Economics highlighted the dual challenges ahead:
“On one hand, rising oil prices will fuel inflation, and on the other, the country could face an additional $500 million expenditure on oil imports. It is crucial for the government to focus on policies promoting export diversification and foreign exchange stability. Immediate steps to implement the Economic Transformation Act are also necessary.”
