The three countries approached the disruption using different methods but underscore the significance responsible integration in Central and East Asian markets has on energy security in addition to the impact national governance planning has on managing political risk.
INSTABILITY IN GLOBAL FUEL CHAINS
This commentary has been kindly provided by Declan Galvin who is the Managing Director of Exigent Risk Advisory, a Nairobi-based strategic risk advisory firm supporting clients manage political, macroeconomic, and investment risks in Africa.
Analysing responses and interventions by East African Nations
The joint Israeli-US military strikes inside the Islamic Republic of Iran since late February 2026, including an attack that killed the long-time Supreme Leader of Iran Ali Khamenei, created immediate uncertainty over regional stability and access to the Strait of Hormuz. The subsequent blockade and disruption of the Strait of Hormuz, where approximately 20% global oil transits, pushed crude prices past USD 100 a barrel and threatened local supply security inflating consumer costs in East African markets.
The military action underscored several emerging geopolitical trends that have implications on global markets, particularly East Africa, namely: (1) that the United States remains one of the primary sources for global uncertainty; (2) that African economies which are responsibly integrated with Central and East Asian markets possess stronger leverage in managing external shocks; and (3) that national governance practices in African markets shape the impact and intensity of political risk for the public and businesses.
Significantly, however, the impact on the price of petroleum products was more predictable and nuanced than many commentators signalled at the beginning of the Iran conflict. Importantly, the following macroeconomic dynamics shaped the impact, severity, and timing of price fluctuation for East African markets:
- Commodities speculators
An unavoidable dynamic in global commodities markets is the role that speculators play in determining near-term pricing fluctuations. The attack on Iran remains an acute geopolitical event, including the retaliatory strikes on Gulf state petroleum production facilities, which led speculators to forecast supply chain disruptions resulting in short-term price increases. This risk is often spread across global markets and, under ideal circumstances, a country’s macroeconomic policies and economic planning can mitigate the impact of speculation over the near-to-medium term.
- Economic safeguards and planning
Nearly all countries across the world, including all East African nations, claim to install a series of safeguards, mitigation measures, or market planning interventions to absorb short-term economic shocks without causing impact on consumer pricing and business operations. Typically, these include fuel stockpiles, regulations that discourage product hoarding, and laws that facilitate transparent trade in energy products. The Iran conflict, and subsequent disruption of the Strait of Hormuz, has resulted in supply disruptions which requires East African nations to make use of these safeguards. However, in their absence, or opaque use, these conventional mitigation measures may not be enough to calm market jitters and promote the economic confidence needed to stabilise local price fluctuations.
- Acute supply chain disruption
In circumstances of prolonged supply chain disruption, the pricing of petroleum products will almost certainly increase after safeguard and economic planning measures are exhausted. In the case of the Iran War, which has been ongoing since February 2026, the price of oil and petroleum products is expected to increase. Presently, despite returned optimism of an end to the war, the conflict is contributing to supply chain uncertainty.
For East African markets, especially Kenya, one of the most significant issues contributing to supply chain insecurity is the lack of verification of the safeguarding measures – especially fuel reserves – to absorb near-term disruptions. In Kenya, the lack of public confidence in verifiability of these mitigation measures meant that its market is more exposed to speculators and industrial action. However, other markets took a more state-driven interventionist approach to managing fuel disruptions with varied success.
Kenya: Relying on State-backed bilateral agreements
On paper, Kenya is best positioned to manage near-to-medium term economic shocks including the current supply chain disruptions. However, the Kenya Government’s management of the situation, especially between April and May, was more reactionary than implementing a mitigation protocol. Specifically, the Government-to-Government (G2G) fuel procurement framework was designed to install pricing stability in the Kenyan market and would theoretically be used in conjunction with other safeguards like fuel reserves to ease consumer impact.
However, the controversial G2G arrangement has been the subject of intense speculation since its rollout in 2023. Moreover, the Government, including the energy regulators at the Energy and Petroleum Regulatory Authority (EPRA), were not able to convey the availability of fuel reserves or the inbound fuel stocks which caused intense public anxiety throughout April and May.
On 4th April 2026, three key Government officials from the energy sector, including the Director-General of EPRA, were arrested and forced to resign over allegations they were benefitting from importation of low-grade fuel which was going to be secretly integrated into the Kenyan market. Ultimately, the G2G program did not stabilise prices in significant manner resulting in intense criticism over Government accountability and several days of industrial action by transportation operators that paralyzed transit in Nairobi, Mombasa, and Kisumu. The Government was forced to ostensibly subsidise fuel to prevent a nationwide spread of protests.
Uganda: Management of reserve stock and alternative supply corridors
Uganda which is landlocked geography has historically made its fuel supply chain acutely vulnerable to external disruptions resulting in a strategy centred on state-enforced market control, supply route diversification, and prioritising domestic production. Operating through State-owned companies, the Government has taken direct control over importation to cut out independent regional middlemen. In response to the Middle Eastern supply panic, the State-owned Uganda National Oil Company (UNOC) moved aggressively to secure long-term cargo deliveries and build strategic national buffers.
By aggressively monitoring its inventory, UNOC successfully maintained stock reserves – including tens of millions of litres of petrol, diesel, and aviation fuel – giving the country a stable baseline buffer against immediate supply disruptions at regional ports. Simultaneously, the Government expanded its supply routes beyond Kenya’s Mombasa port to include supply lines through the Central Corridor, utilising Tanzania’s ports of Tanga, Dar es Salaam, and Mtwara to ensure that global disruptions do not leave the country isolated.
While UNOC’s aggressive stockpiling successfully prevented significant fuel scarcity, petroleum product prices increased. Additionally, there was no major industrial action in Uganda but black-market operators reportedly began smuggling cheaper, low-quality fuel into the country and border fuelling stations reportedly gouged prices for consumers and lorry drivers.
Tanzania: Subsidies and communication for more predictability
Tanzania has approached the fuel crisis by positioning itself as both a resilient domestic market and a critical maritime gateway for its landlocked neighbours. However, the Energy and Water Utilities Regulatory Authority (EWURA), was forced to, in addition to limited purchase controls, implement record-high price adjustments that increased petrol and diesel prices over 33% in a single month.
The price increases triggered anxiety and panic-buying waves at fuel stations across Dar es Salaam, Arusha, and Mwanza. Fearing that the Middle East conflict would cause complete supply depletion, motorists queued for hours to fill their tanks and jerrycans, briefly overwhelming local supply chains and causing temporary, localised shortages. However, Tanzania had previously established a substantial three-month fuel stock reserve which it used to mitigate panic buying and domestic shortages.
Once the Government deployed its three-month strategic reserves, the initial panic subsided and did not result in protests. President Samia Suluhu Hassan’s administration offered clearer communication about global shipping disruptions and Government action that stabilised the national mood.
However, the public’s coping mechanisms were tested especially when transportation operators tried to raise fares to cover their rising overhead costs prompting tension with passengers. In rural agricultural areas, farmers expressed deep worry that the high cost of diesel for tractors and transport trucks would wipe out their seasonal profit margins, leading to quieter, localised protests from agricultural Unions demanding direct fuel subsidies for food producers.
Comparative assessment of regional strategies
The divergent approaches of Kenya, Uganda, and Tanzania reveal distinct governance approaches in energy security. While Kenya prioritised Public-Private integration backed by State-to-State diplomacy, gaps in its oversight of these mitigating factors failed to stymie political unrest and price volatility. Uganda has adopted a more statist approach, eliminating private-sector import channels in favour of a centralised state monopoly capable of rationing, stockpiling, and negotiating with States to open up additional supply lines. Tanzania leveraged planning and fuel rationing to sustain stocks and create a more predictable business environment which reduced public unrest at a politically sensitive time following disputed national elections in 2025.
The differences in how these countries managed the fuel crisis reflects how critical planning and oversight is for energy security. To varying degrees, the preparation and response by all three countries acknowledges the necessity to move from ad-hoc spot market reliance and toward a more structured and predictable energy security during a period of unprecedented global uncertainty.
Uganda and Tanzania managed the geopolitical implications of the fuel crisis by entering into sovereign agreements and diversifying supply chains to promote continuity and stability. In particular, Uganda used the crisis as an opportunity to expand its influence with both Tanzania and Kenya by negotiating new supply chains as well as calling for more leadership in the Kenya Pipeline Company. Similarly, Tanzania avoided another round of demonstration by reducing consumer uncertainty around supplies and leveraging fuel reserves.
The three countries approached the disruption using different methods but underscore the significance responsible integration in Central and East Asian markets has on energy security in addition to the impact national governance planning has on managing political risk.
This is a commentary and comments are welcome by email to: info@eaa.co.ke . The views expressed here are not necessarily those of the Association.