By: Staff Writer
June 23, Colombo (LNW): The Ceylon Petroleum Corporation (CPC) has announced its readiness to implement contingency measures in the face of a possible global fuel crisis, triggered by escalating conflict in the Middle East. The move comes as global oil prices surged to their highest levels since January, following a U.S. strike on Iranian nuclear facilities and a potential blockade of the critical Strait of Hormuz.
Brent crude prices rose by 72 cents to $77.73 a barrel, while U.S. West Texas Intermediate crude climbed 71 cents to $74.55, according to Reuters. The price surge is largely attributed to growing fears of supply disruption as tensions heighten in the Persian Gulf region.
The situation intensified after the Iranian parliament reportedly voted to close the Strait of Hormuz — a key maritime passage through which about 20% of the world’s oil and gas is transported. The narrow 21-mile-wide strait is considered a vital chokepoint, with approximately 20 million barrels of oil passing through it daily from major exporters like Saudi Arabia, Iran, and the UAE, according to the U.S. Energy Information Administration (EIA).
Despite these developments, the CPC stated that there would be no immediate adjustment in local fuel prices. However, officials acknowledged that Sri Lanka is not immune to global market pressures and is actively preparing for potential supply chain disruptions.
CPC officials indicated that the effects of the global oil market instability could stretch into August and September. As a precautionary step, the corporation is testing crude oil samples from alternative sources such as Nigeria, in case imports from traditional suppliers are disrupted.
Economic analysts in Sri Lanka have raised red flags about the looming economic consequences. Professor Priyanga Dunusinghe of the University of Colombo warned that the situation could drive inflation and potentially cost the country around USD 500 million in additional oil import expenses.
He emphasized the importance of swift government action: “The government must prioritize diversifying exports and expanding foreign exchange sources to mitigate the impact. Implementing the proposed Economic Transformation Act should be an immediate priority.”
With tensions in the Middle East showing no signs of abating, experts stress that the ripple effects of rising oil prices could strain Sri Lanka’s fragile post-crisis economy. CPC’s proactive stance and economic policy adjustments may prove crucial in navigating the potential energy crisis looming on the horizon.
