Tanzania’s fuel import costs set to hit two-year high due to Middle East conflict

Tanzania's refined product import costs jumped by 10% in the year ending May 2026, and are on track to hit a two-year high, its central bank reported July 13.

The country spent $2.6 billion on imports of refined oil products over the one-year reporting period, up from $2.4 billion last year, the Bank of Tanzania reported.

The increase was mainly due to higher oil prices driven by geopolitical tensions in the Middle East, the report said, as the US-Iran conflict hit around a fifth of global oil trade and sent prices soaring. On a calendar-year basis, Tanzania expects to spend $2.75 billion importing oil products in 2026, up 14% from 2025.

Despite rising pressure from global oil benchmarks, the bank credited Tanzania's state fuel subsidies, introduced in April and May, for preserving fuel affordability during the four-month conflict in the Middle East Gulf.

In ordinary times, Kenya imports roughly 200,000 b/d of refined product to its port Mombasa, which also acts as an import hub for other East African countries. In 2025, 64% of that supply came from the Middle East Gulf, but supplies from the region fell to zero in May, according to S&P Global Commodities at Sea data.

The rollout of a Tanzanian Shilling 259/liter (1 cent/l) diesel subsidy was designed to protect consumers from rising costs in the international market, to which the country is heavily exposed without any refineries of its own.

The measures have kept prices competitive relative to neighboring countries such as Uganda, Rwanda and Kenya, which experienced deadly fuel protests in May and was forced to introduce its own form of subsidies. Other African countries have overhauled their import models to tackle shortages, with Zambia and Namibia both entering exclusive supply contracts with global trader Vitol.

Subsidy pressure

Nevertheless, state support has put growing pressure on the public purse. External debts for energy and mining grew to $4.72 billion in May, the central bank reported, up from $4.19 billion prewar and similar levels in 2025. Overall, external debts across sectors were $45 billion, up by 18% from last year's level.

Refined products accounted for 13% of the country's total goods import bill in May, but rising costs in other segments took the total from $17.3 billion in the year ending May to $20.4 billion in 2026.

Although subsidies have prevented rising fuel costs from fully passing through to the Tanzanian consumer, inflation has continued to tick higher. Tanzania's headline inflation was 4.2% in May, up two percentage points from April and rising from 3.2% the previous year, the report said.

"Tanzania has continued to record strong economic growth and low inflation, but the impact of rising fuel prices is emerging," said a July 10 statement from the International Monetary Fund, which noted that gold exports had helped partly offset the import pressures of the Middle East conflict so far.

Tanzania consumes about 93,000 b/d of refined products, with diesel accounting for roughly 60% of all fuel use and gasoline for around 35%. The country currently relies on imports for all of its fuel, but has offered to back a new 700,000 b/d refinery project in Kenya from Nigeria's Dangote Group to boost regional energy security.