Ethiopia has implemented a fresh round of fuel price increases, citing mounting fiscal pressure from global oil market disruptions and a rapidly growing subsidy burden.
The Ministry of Trade and Regional Integration announced that, effective April 1, 2026, the price of white diesel has risen by 16.6%, marking the second major adjustment within a single month. Diesel, a critical input for transport, agriculture, and construction, now sells at 163.09 birr per liter, up from 139.84 birr.
Despite the upward revision, government officials say the state continues to absorb significant costs to shield consumers from the full impact of international prices. The total fuel subsidy has now reached nearly 272 billion birr.
“Even with the current adjustments, domestic fuel prices remain well below actual market levels,” officials said, attributing the pressure to escalating global oil prices driven by geopolitical tensions.
The latest increase follows a series of price revisions in March, making it the sharpest monthly fuel price surge recorded in Ethiopia. Heavy black diesel prices climbed by 20.4% to 160.68 birr per liter, while gasoline rose by 7.7% to 142.41 birr.
In a bid to protect households and essential public services, the government has introduced differentiated pricing. Large commercial fuel users will now pay 210 birr per liter for white diesel.
Minister of Trade and Regional Integration Kassahun Gofe said the adjustments were driven primarily by disruptions in global supply chains linked to conflict in the Middle East. The closure of the Strait of Hormuz — a key transit route for roughly 20% of global oil supply — has significantly constrained fuel availability.
The Minister disclosed that shipments destined for Ethiopia, including 120,000 metric tons of diesel and 60,000 metric tons of jet fuel, are currently stranded in the Arabian Gulf.
As a result, the government has been forced to turn to the spot market, where procurement costs have surged dramatically. The premium per barrel, previously $9.25 under long-term contracts, has jumped to as high as $92.88 for emergency purchases.
Kassahun noted that the government is still subsidizing fuel heavily, covering about 71 birr per liter of diesel and 32 birr for gasoline. Without these subsidies, diesel prices could reach as high as 234.17 birr per liter.
However, with subsidy costs exceeding 272 billion birr, authorities say maintaining the previous pricing structure is no longer sustainable.
To mitigate supply disruptions, a national task force has been established to oversee fuel distribution. Priority allocation has been given to key sectors, including logistics and freight transport, public transportation, essential services such as healthcare and utilities, mechanized agriculture, export industries, and major public institutions.
Analysts warn that rising diesel costs are likely to have a ripple effect across the economy, increasing transportation expenses and putting upward pressure on food and consumer prices.
