Goverment cushions consumers amid Middle East tensions impact on fuel prices

AMID a spike in global prices of fuel that were triggered by the Middle East conflict, the Government moved in to cushion consumers by reducing some of its charges, averting an astronomical rise in the prices of fuel.

On Wednesday, the Zimbabwe Energy Regulatory Authority (Zera) announced new fuel prices effective March 4, with petrol rising to US$1,71 per litre and diesel climbing to US$1,77 per litre. The new prices represent a jump from the previous rates of US$1,56 for petrol and US$1,52 for diesel due to the military conflict conflagrating in the Middle East, a vital source of global petroleum.

Without the Government intervention, the actual prices would have been US$1,90/litre for diesel and US$1,81/litre for blend.

In a statement, the Zimbabwe Energy Regulatory Authority (Zera) said Government reduced some of the charges.

“The above prices are a result of Government reducing some of its charges to cushion the consumers from astronomical increases that have happened from changes in the international market,” the authority said.

Zimbabwe and South Africa have announced rises in fuel prices following a surge in global oil prices triggered by escalating tensions in the Middle East — a development that is now reverberating across multiple continents.

The latest increases came into effect on Wednesday as the two Governments and regulators adjusted prices in response to rising international crude oil costs linked to geopolitical instability in the oil-producing Middle East.

Zera attributed the increases to rising international oil prices and global market volatility linked to geopolitical developments in the Middle East, a region that supplies a huge portion of the world’s crude oil.

Zimbabwe imports all of its petroleum products, making local pump prices highly sensitive to global market movements.

Addressing Parliament on Wednesday, Mines and Mining Development Minister Soda Zhemu, speaking on behalf of Energy and Power Development Minister July Moyo, said Government was closely monitoring developments in the Middle East and their potential impact on fuel supplies and prices.

“The Minister of Energy presented a report to Cabinet yesterday (Tuesday) indicating the level of our stocks that are holding in the country, both diesel and petrol, including Jet A1 for our aeroplanes,” he said. “We were also briefed about the stocks that are in transit between our country and Beira (Mozambique) and the ships that are about to dock in Beira.”

Minister Zhemu told the National Assembly that the country at present has fuel stocks sufficient to last between two and three months, while additional supplies are already on their way through regional supply routes.

“It shows we have some stocks that can take us for the next two to three months,” he said.
However, he acknowledged that global developments could still influence prices.

“We cannot guarantee that prices will not fluctuate. Prices are a function of supply and demand. For as long as our supply routes are disrupted, obviously, the prices will respond,” he said.

He noted that some global supply routes had already been affected by the conflict.

“As a result of the conflict, some routes have since been closed. As a result, prices will respond,” he said.
Meanwhile, motorists in South Africa are also paying more at the pump following new fuel price adjustments announced by the Department of Mineral and Petroleum Resources. From Wednesday, petrol 93 increased by 20 cents to about R20,19 per litre inland, while petrol 95 rose by 20 cents to around R20,30 per litre inland. Diesel prices also rose by between 62 and 65 cents per litre.

Authorities in South Africa attributed the adjustments to rising international petroleum product prices and global supply concerns stemming from tensions in the Middle East.

While Zimbabwe and South Africa have officially announced price hikes, the impact of the Middle East conflict is being felt across multiple continents, with Governments and industries scrambling to respond to soaring energy costs.

In the Middle East itself, the conflict has forced production stoppages. Qatar shut down its liquefied natural gas facilities — some of the world’s biggest, which supply around 20 percent of global LNG exports — after facilities were hit in the attacks.

Iraq, Opec’s second-largest producer, has been forced to cut production by more than three million barrels per day, with decreases at the Rumaila and West Qurna 2 fields. Saudi Arabia suspended production at its largest domestic refinery, while Israel and Iraq’s Kurdistan also shut chunks of their gas and oil output.

In Asia, the effects have been severe. India, one of the most dependent countries on oil and gas from the Middle East, has started to ration gas supplies to industries after Qatari LNG production was shut down.

China has seen refiners begin to shut units in response to the conflict’s impact on crude supply. Japan has urged vessels to avoid the Persian Gulf as it seeks to safeguard energy shipments following a sharp drop in Strait of Hormuz traffic, and stock exchanges in both Japan and South Korea have experienced declines. South Korea, which relies heavily on Middle Eastern imports, is bracing for price increases similar to those seen in other Asian economies.

In Europe, the impact has been dramatic. European gas prices soared as much as 40 percent, adding to a 40 percent surge the previous day. At the Dutch-based Title Transfer Facility (TTF), Europe’s most liquid virtual gas trading hub, prices surged nearly 20 percent amid escalating geopolitical tensions. Countries such as Germany and France have reported rising petrol and diesel prices amid fears that prolonged instability could disrupt shipping routes and tighten global energy supplies. The European union is stepping up energy monitoring and security vigilance as the crisis unfolds.

In the United States, where gasoline prices are a key political pressure point, the cost jumped above US$3 per gallon for the first time since November, just weeks after President Donald Trump touted his achievements in bringing prices down to US$2.

According to American Automobile Association data, the average price of gasoline in the US rose 7,5 percent over one week to reach $3,20 per gallon. Higher prices at the pump mark a major risk for Trump and his fellow Republicans as they head into the midterm elections in November.

Shipping rates around the world have also jumped to an all-time high as the conflict has intensified. Hundreds of tankers loaded with oil and LNG are stranded near big hubs, such as the United Arab Emirates’ port of Fujairah, unable to reach customers in Asia, Europe and elsewhere.

The increases are expected to have wider economic implications across the globe, where higher fuel costs often translate into increased transport charges and higher prices for goods and services.

With the Middle East remaining a key source of global oil supply, continued instability in the region could result in further price volatility in the coming months, placing additional pressure on fuel-importing countries worldwide.