Sri Lanka Raises Fuel Prices 25% as Middle East War Escalates

Colombo, Sri Lanka – Sri Lanka implemented a 25% increase in fuel prices on Sunday, March 22, 2026, marking the second hike in as many weeks. The move comes as the nation braces for potential disruptions to energy supplies stemming from the ongoing conflict in the Middle East.

Fuel Price Adjustments

Regular petrol prices have risen to 398 Sri Lankan rupees (approximately $1.30 USD) per liter, up from 317 rupees. Diesel, the primary fuel for public transportation, now costs 382 rupees per liter, an increase of 79 rupees. TRT World reports these adjustments are intended to mitigate the impact of potential supply chain issues.

Government Measures to Curb Consumption

In addition to the price increases, the Sri Lankan government last week introduced fuel rationing to limit consumption. Officials at the Ceylon Petroleum Corporation anticipate a 15 to 20% reduction in fuel usage as a result of these measures. The Economic Times highlights that President Anura Kumara Dissanayake has urged the country to prepare for a prolonged conflict in the Middle East that could jeopardize energy supplies.

Economic Context and Regional Concerns

The government has likewise ordered a four-day working week, effective last Wednesday, and encouraged employers to reinstate work-from-home arrangements where feasible. These steps aim to reduce overall energy demand. Sri Lanka relies entirely on imported oil and coal for its energy needs, sourcing refined petroleum products from Singapore, Malaysia, and South Korea, and crude oil from the Middle East. NDTV notes the Strait of Hormuz, a critical waterway for global oil exports, has seen disruptions due to the conflict.

The current situation poses a significant threat to Sri Lanka’s economic recovery. The country defaulted on its $46 billion foreign debt in 2022 due to a foreign exchange crisis and has since secured a $2.9 billion bailout from the International Monetary Fund. A prolonged conflict in the Middle East could undermine these efforts.

Key Takeaways

• Sri Lanka increased fuel prices by 25% due to concerns over Middle East conflict.
• Petrol now costs 398 rupees/liter, diesel 382 rupees/liter.
• Fuel rationing and a four-day work week have been implemented.
• Sri Lanka is heavily reliant on Middle Eastern oil supplies.
• The situation threatens the country’s economic recovery following a 2022 debt default.