This article compares Ethiopia’s experience with its economic peers
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The 2026 global oil crisis, triggered by the U.S.-Israel conflict with Iran and the near-total disruption of the Strait of Hormuz (which handles about 20% of world oil flows), has sent Brent crude prices surging above $100 per barrel. For Africa’s net oil importers, this has meant skyrocketing import costs, supply chain breakdowns, and painful choices between subsidies, price hikes, or shortages. Ethiopia, a landlocked nation with virtually no domestic oil production or refining capacity, stands out as one of the hardest hit. This article compares Ethiopia’s experience with its economic peers, i.e., countries of similar size, development level, and growth trajectory in sub-Saharan Africa, primarily Kenya, Tanzania, and Ghana. These nations share Ethiopia’s status as non-major oil producers and net importers but differ in logistics, diversification strategies, and fiscal buffers.
Ethiopia: A Perfect Storm of Dependency and Disruption
Ethiopia imports nearly 100% of its refined petroleum products, spending over $4 billion annually on fuel. The country relies heavily on long-term contracts with Middle Eastern suppliers, particularly Kuwait (60% of white diesel and 100% of jet fuel). When Hormuz closed in late February 2026, three ships carrying 180,000 metric tons of fuel were stranded, slashing daily diesel supply from 9.2 million liters to 4.5 million liters. Black-market sales and contraband added to the chaos.
The government responded with emergency subsidies. pushing total subsidy costs into the hundreds of billions of birr. Fuel prices have been hiked twice in 20 days, yet queues stretch for hours at stations in Addis Ababa and beyond. Rationing measures, conservation appeals from the prime minister, and a task force for distribution have been deployed. Transport costs have spiked, food prices are climbing, and industries face shutdown risks. Ethiopia’s pre-existing foreign exchange shortages and currency depreciation have turned this into a “layered shock,” exposing deep macroeconomic vulnerabilities.
Economic Peers: Varied Impacts Across the Continent
Economic Peers: Varied Impacts Across the Continent
Kenya is also fully import-dependent, sourcing primarily from the Gulf via the Port of Mombasa. About 20% of its 3,100 retail outlets reported shortages by late March 2026 due to panic buying and frozen pump prices despite global cost surges. The government has downplayed a full crisis, urged against hoarding, and is seeking alternative suppliers. Kenya’s port infrastructure gives it a logistical edge over Ethiopia, but the crisis still threatens inflation and growth. Unlike Ethiopia, Kenya has minimal domestic oil output in early stages.
Tanzania passed through costs more aggressively. In early April 2026, the Energy and Water Utilities Regulatory Authority (EWURA) raised petrol prices by over 30% (from TSh 2,864 to TSh 3,820 per liter in Dar es Salaam), with diesel and kerosene following suit. The hikes were explicitly linked to Hormuz disruptions. Stocks were projected to last until mid-May, but prices rose anyway to reflect import realities. No widespread shortages reported, but households and businesses face immediate pain.
Ghana has shown greater resilience. With reserves covering about six weeks, the country diversified aggressively: a Russian tanker delivered 320,000 barrels in early April, alongside supplies from Europe, Nigeria’s Dangote Refinery, and others. Proximity to Dangote and flexible sourcing have prevented acute shortages, contrasting sharply with Ethiopia’s rigid Kuwait dependency. Ghana’s approach highlights how diversification mitigates shocks.
Fuel stations across affected African nations, including peers like Kenya and Tanzania, saw queues and price surges in early 2026.
Why Ethiopia Stands Out: Structural Factors
Several factors explain Ethiopia’s sharper crisis compared to peers:
Logistics and Geography: Ethiopia depends on the Djibouti corridor (vulnerable to Red Sea/Hormuz ripple effects), while Kenya and Tanzania have direct port access, and Ghana benefits from Atlantic routes and regional refineries.
Fiscal Space and Subsidies: Ethiopia’s heavy subsidies shield consumers short-term but strain an already stretched budget amid forex shortages and reforms. Kenya and Tanzania leaned more toward price adjustments; Ghana avoided blanket subsidies through sourcing flexibility.
Pre-Existing Vulnerabilities: Ethiopia’s chronic forex constraints and currency float (2024) amplified import costs. Peers like Ghana had stronger reserves and trade ties.
Refining and Production: None are major producers, but access to Dangote (benefiting Ghana, Tanzania, Côte d’Ivoire) or diversified suppliers gave others breathing room. Ethiopia lacks equivalent options.
All peers face higher transport and fertilizer costs, risking food inflation and slower growth. However, Ethiopia’s scale (Africa’s second-most populous nation) and subsidy burden make the macroeconomic stress more acute.
Ceasefire Hope
On April 7, 2026, U.S. President Donald Trump announced a provisional two-week ceasefire with Iran, hours before a self-imposed deadline that had threatened devastating strikes on Iranian infrastructure. Iran agreed to the pause and committed to allowing “complete, immediate, and safe” passage through the Strait of Hormuz for the next two weeks, coordinated under Iranian military management. The deal, brokered in part by Pakistan with talks scheduled to begin in Islamabad on April 10, has already triggered a sharp market reaction: Brent crude and West Texas Intermediate futures plunged 10-16% overnight, with global stocks rallying as war-risk premiums evaporated.
For Ethiopia, this ceasefire points in a positive direction. Lower global oil prices should ease the cost of future imports, potentially reducing the fiscal burden of subsidies and helping stabilize supply lines once stranded tankers can move. If Hormuz traffic resumes smoothly, the worst of the immediate shortages could begin to ease within weeks, offering a much-needed breather for an economy already grappling with queues, rationing, and rising food costs.
Yet the entire crisis leaves Ethiopia with a profoundly painful lesson. The near-halving of daily diesel supplies exposed the extreme risks of 100% import dependence, rigid long-term contracts with a handful of Gulf suppliers, and the vulnerabilities of a landlocked supply corridor through Djibouti. Pre-crisis forex shortages turned a global disruption into a domestic emergency, forcing emergency subsidies, black-market surges, and conservation appeals that strained government finances and public patience. While peers such as Ghana mitigated the shock through diversified sourcing and regional refining access, Ethiopia’s structural rigidities amplified every ripple from Hormuz.
Policymakers must now accelerate long-term reforms: building strategic petroleum reserves, forging flexible supplier networks, exploring partnerships with African refineries like Dangote, and fast-tracking renewable energy and electric mobility to leverage Ethiopia’s vast hydropower potential. Without these steps, future shocks will deliver the same harsh blow. The ceasefire offers short-term hope, but the real test for Ethiopia lies in whether it internalizes this lesson before the next crisis arrives.
