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Fuel Crisis Could Push Tanzania to the Brink if Middle East War Drags On, Warns Industry Chief

Fuel prices may hit record highs with potential supply shortages if the conflict persists, though the government assures current stocks are sufficient.

The Chanzo Reporter

March 24, 2026

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Dar es Salaam – If the Middle Eastern conflict persists beyond the coming months, Tanzania faces an unprecedented energy crisis that could push fuel prices to levels never before witnessed and trigger severe supply shortages that threaten the entire economy, according to Raphael Mgaya, Executive Director of the Tanzania Association of Oil Marketing Companies (TAOMAC).

Speaking in an interview on March 21, 2026, Mr Mgaya painted a stark picture of what could unfold if the war between the United States, Israel and Iran continues unabated.

Within two weeks of the conflict’s outbreak on February 28, crude oil prices surged by more than 70 per cent—a spike that has never occurred in such a short timeframe in the history of global oil markets, he said.

“This is bigger than COVID, bigger than the Russia-Ukraine war,” Mr Mgaya stated bluntly. “Within two weeks, oil prices jumped by more than 70 per cent. That has never happened before.”

The crisis has sent shockwaves through global energy markets because the Strait of Hormuz, the world’s most critical oil shipping chokepoint through which approximately 20 per cent of global oil passes, has been effectively shut down.

The waterway, which separates Iran from Oman, is now almost impassable due to Iranian threats and attacks on vessels attempting to transit through it.

For Tanzania, a net importer of all refined petroleum products, the implications are dire. The country consumes approximately 15 million litres per day (6,176,889 litres of petrol; 8,274,703 litres of diesel; 592,651 litres of Jet A-1 and 10, 326 litres of kerosene), all of which must be imported.

Industry analysts have calculated that if current price trajectories continue, Tanzanians could be paying as much as Sh4,700 per litre within the next month—nearly double the current price of around Sh3,000.

“When you go to the pump today, you are paying less than Sh3,000 per litre,” Mr Mgaya explained. “Next month, you could be paying 4,000, 4,500, or even 4,700 shillings per litre.”

Ripple effects

The impact would extend far beyond the petrol station. Transport costs would surge, pushing up prices for food, medicines and virtually every commodity that relies on fuel for distribution.

The oil marketing companies themselves face a double squeeze: not only must they pay more for fuel, but the diesel they use to transport products across the country has also become prohibitively expensive.

“When fuel prices rise by 70 per cent, and your trucks run on diesel, the cost of distribution becomes a major challenge,” Mr Mgaya said. “You cannot reach customers at a profit when your operational costs have tripled.”

The financial burden on OMCs is compounded by another structural problem. Tanzania’s import system requires companies to pay for fuel upfront, typically two months before it arrives in the country.

If a company had planned to import 7,000 metric tonnes at a cost of US$10 million, it might suddenly need US$20 million to import the same quantity at current prices. Most companies lack the working capital to absorb such shocks.

“The conversation within the industry right now is about survival,” Mr Mgaya said. “Companies are asking: do we have the capital to finance these imports? Can we afford the financing charges? Can we pay the storage costs while waiting for the fuel to arrive?”

Cautious optimism

Despite the grim outlook, Mr Mgaya expressed cautious optimism about the government’s response. He described the administration’s efforts as “satisfactory so far,” noting that senior officials have been engaged and responsive.

“The government has been very responsive,” he said. “We have had good meetings with the Minister of Energy and the Permanent Secretary. There are things that have been agreed upon that will be implemented.”

Two days after Mr Mgaya’s interview, the government moved to reassure the public. On March 23, 2026, Energy Minister Deogratias Ndejembi convened a sectoral meeting with all institutions under the Ministry of Energy to brief him on the fuel situation and guarantee that the country has adequate reserves.

The Petroleum Bulk Procurement Agency (PBPA), which manages Tanzania’s centralised fuel importation system, reported that the country has sufficient fuel stocks to last several weeks.

According to Erasto Simon, the PBPA’s Chief Executive Officer, current reserves comprise 230 million litres of petrol (sufficient for 38 days), 180 million litres of diesel (47 days) and 31 million litres of aviation fuel (91 days).

“When you combine the fuel we have in the country with what is already on ships heading to us, we have petrol stocks lasting 78 days, diesel lasting 50 days, and aviation fuel lasting 91 days,” Mr Simon told the minister. “The situation is satisfactory, and we have no challenges despite the war.”

The Tanzania Petroleum Development Corporation (TPDC) added that it has already secured contracts for fuel deliveries through May, June and July, ensuring a continuous supply pipeline.

“We have secured contracts early to ensure that by the fifth, sixth and seventh months, fuel will continue to arrive on schedule,” said Mussa Makame, TPDC’s Chief Executive Officer.

No hoarding, no speculation

Minister Ndejembi issued a series of directives aimed at preventing panic buying and fuel hoarding. He instructed the Energy and Water Utilities Regulatory Authority (EWURA) to ensure that all fuel depots in the country are properly monitored and that no depot is hiding fuel in speculation that prices will rise further.

“I do not want to see people saying they have no fuel when depots have fuel,” the minister said sternly. “From Dar es Salaam to Kigoma, fuel must be available at all times.”

The minister also warned fuel suppliers against invoking force majeure clauses to escape their contractual obligations. He noted that some international suppliers, particularly in the Middle East, have already declared force majeure—essentially claiming they cannot fulfil contracts due to circumstances beyond their control.

“I will not accept any force majeure claims from companies that have entered into contracts with us,” Minister Ndejembi declared. “If they claim they cannot deliver, they must still find ways to get fuel to Tanzania. That is their contractual obligation.”

He ordered the PBPA, EWURA, TPDC and security agencies to form a joint task force to track fuel shipments in real time, ensuring that every vessel destined for Tanzania actually delivers its cargo rather than being diverted to more profitable markets.

“It is one thing to say ships are on the way. It is another thing for those ships to actually deliver the fuel,” the minister said. “Some ships are being redirected to markets offering higher prices. We must ensure that every shipment destined for Tanzania arrives here.”

Severity hinges on duration

The critical variable in all these calculations is the duration of the conflict. International Energy Agency predictions made before the war suggested oil prices would fall to around US$60 per barrel in 2026.

Current forecasts, however, suggest prices could reach US$200 per barrel if the war continues—a level never before witnessed in history.

“If this war continues, we do not know what will happen,” Mr Mgaya said frankly. “Some countries, like South Korea, are already closing factories because they cannot get crude oil from the Arab Gulf. The situation is very serious.”

He pointed out that Tanzania’s situation is particularly precarious because the country depends almost entirely on refined products imported from refineries in Singapore and India, which themselves depend on crude oil from the Middle East.

If those refineries shut down due to a lack of feedstock, Tanzania’s supply lines would be cut off entirely.

“We source mainly from Southeast Asia—Singapore and India—because they are close by,” Mr Mgaya explained. “But those refineries depend on crude from the Arab Gulf. If they close, we have a problem.”

When asked what the government could do to mitigate the crisis, Mr Mgaya outlined three immediate measures that other countries have already implemented: reducing fuel taxes, introducing rationing, and providing subsidies.

On taxation, he suggested that the government could temporarily suspend or reduce certain fuel levies—specifically the petroleum fee and fuel levy—to ease the burden on consumers.

“These taxes ultimately fall on the end consumer anyway,” he noted. “If the government temporarily removes them during this crisis, it would provide some relief.”

Rationing, he explained, would prevent panic buying and artificial shortages. Kenya has already begun rationing, limiting how much fuel each customer can purchase at a time.

“The idea is to ensure that fuel is distributed fairly and that everyone can get some, rather than having some people fill up completely while others get nothing,” he said.

On subsidies, Mr Mgaya acknowledged the fiscal challenge but argued that a broad-based subsidy—applied across the board rather than targeted to specific groups—would be the most practical approach.

“A targeted subsidy is difficult to administer. Everyone would try to access it. A general subsidy, where the government simply reduces the pump price for everyone, is simpler and fairer,” he said.

He cautioned, however, that even these measures would only blunt the impact of the price surge, not eliminate it.

“You cannot maintain the status quo when prices have risen by 70 per cent,” he said. “Even if you remove all taxes and provide subsidies, prices will still rise. You can only reduce how much they rise.”

Long-term solutions

Looking beyond the immediate crisis, Mr Mgaya argued that Tanzania must accelerate the development of its natural gas resources to reduce dependence on imported refined products.

The country has vast offshore gas reserves and is advancing a US$42 billion liquefied natural gas (LNG) project that could begin production in the early 2030s.

“We are blessed with natural gas,” he said. “If we could accelerate the development and use of natural gas—for power generation, for vehicles, for cooking—we would reduce our dependence on imported liquid petroleum products. Countries like Mozambique, Angola and Nigeria are making a killing by exporting LNG and petroleum products. We should be doing the same.”

He also advocated for the establishment of a price stabilisation fund—a mechanism used by some countries to cushion the impact of oil price shocks.

“When oil prices spike like this, the government could draw from a stabilisation fund to compensate fuel importers and keep prices stable for consumers,” he explained. “It is better than constantly debating subsidies and tax cuts.”

Centralised procurement system

One question that has emerged is whether Tanzania’s centralised fuel procurement system—managed by the PBPA—is adequate for managing a prolonged crisis. Currently, the government negotiates fuel contracts with a single supplier or a small group of suppliers.

Kenya, by contrast, had moved to a similar centralised system (known as G2G, or government-to-government procurement) but has abandoned it after the supplier, the Abu Dhabi National Oil Company (ADNOC), declared force majeure.

Mr Mgaya defended Tanzania’s system, arguing that it is actually more resilient than Kenya’s because Tanzania has multiple suppliers spread across the globe.

“Our system allows us to source from multiple suppliers located anywhere in the world,” he said. “If one supplier fails, another can step in. Kenya’s system collapsed because it depended on a single supplier who declared force majeure. Our system is the best available, though no system is completely foolproof during a war like this.”

A plea for understanding

As fuel prices inevitably rise in the coming weeks and months, Mr Mgaya appealed to Tanzanians to understand the structural constraints facing the country.

“Tanzania is a net importer,” he said. “We do not set global oil prices. We are price takers. Whatever prices are set in the global market, that is what we ultimately pay.”

He urged the public to recognise that oil marketing companies are businesses, not charities. “We will continue to supply fuel despite the challenges,” he said.

“We are talking to the government and all stakeholders to ensure that we navigate this difficult period together. But people must understand that when prices rise globally, they will rise here too. We cannot prevent that. We can only try to manage it.”

He concluded with a message of cautious determination: “We are in this business because it is our livelihood. We will continue to supply fuel to every corner of the country, no matter how difficult things become. But we need support from the government, understanding from consumers, and cooperation from all stakeholders. If we work together, we can get through this crisis.”