Sri Lanka braces for new economic crisis as war on Iran continues
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Sri Lanka is facing a potential new economic crisis in March 2026 due to the ongoing war between the United States/Israel and Iran. The conflict has disrupted traffic through the Strait of Hormuz, a crucial passageway for Sri Lanka's energy imports, 60% of which come through the strait. This disruption has led to fuel shortages and price increases of approximately 33%, reminiscent of the 2022 economic crisis. The government has reintroduced a QR-based fuel rationing system, allocating limited amounts of fuel per week to different vehicle types. Furthermore, the war's impact on fertilizer supplies, much of which also passes through the Strait of Hormuz, is expected to significantly increase food prices in Sri Lanka, potentially by 15%. The situation is causing concern among Sri Lankans who remember the hardships of the previous economic crisis.
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AI-ExtractedIran responded by halting most traffic via the Strait of Hormuz, through which 20 percent of the world’s oil and gas passes.
Sri Lanka has raised the price of fuel by approximately 33 percent since the start of the war on Iran.
Sri Lanka imports 60 percent of its energy needs, much of it through the strait.
Sri Lanka has no storage capacity beyond one month’s consumption needs.
Researchers at the Kiel Institute for the World Economy estimate that Sri Lanka could see a 15 percent overall increase in food prices.
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