Sri Lanka cuts fuel prices after Middle East tensions ease, first cut since war

Sri Lanka’s state Petroleum Corporation announced on Tuesday a reduction in fuel prices, cutting diesel by 25 rupees to 382 rupees per litre (about $1.15) and petrol by 20 rupees to 414 rupees per litre. The cuts, the first since the Middle East conflict triggered a surge in energy imports, follow a sharp drop in global oil prices after the United States and Iran agreed to hold talks to end their hostilities. Earlier, Sri Lanka had raised petrol and diesel prices by almost 50 percent after US and Israeli strikes on Iran on 28 February, and had also increased electricity tariffs by a third to pass on higher import costs. The island nation, which imports all its oil and relies on imported coal for power, warned that any prolonged Middle East conflict could jeopardise its fragile economic recovery. The government told the International Monetary Fund, which granted a $2.9 billion bailout loan in March 2023, that sustained high energy prices could undermine efforts to emerge from the country’s worst economic crisis. Under the IMF‑backed reform programme, Sri Lanka must ensure cost‑recovery in fuel and electricity pricing and limit subsidies that strain public finances. The move mirrors debates in Nigeria over fuel subsidy removal and IMF‑linked reforms, offering a regional case study on how external shocks and reform programmes affect pump prices.

SOURCE: https://www.channelstv.com/2026/06/30/sri-lanka-cut-fuel-prices-after-middle-east-ceasefire/