Fuel Prices are on the rise in Uganda despite sufficient stocks By Prisca WanyenyaThe International Energy Agency (IEA) is urging governments to accelerate emergency oil stock releases as disruptions in the Strait of Hormuz and reduced Russian supplies tighten global diesel markets.In Uganda, Energy Minister Monica Musenero said international prices, a weakening shilling and higher fuel taxes are contributing to rising pump prices, although national stocks remain sufficient to meet demand.Musenero last week told Parliament that the rising fuel prices reflect a combination of international supply disruptions, a weakening shilling and higher domestic taxes.Now the IEA warns of mounting pressure on global diesel markets.She noted government has no direct control over pump prices charged by oil marketing companies because Uganda operates a liberalised petroleum market.Meanwhile, the IEA at a meeting on Sunday urged member governments to accelerate emergency oil stock releases and prioritise diesel supplies in response to disruptions in the Strait of Hormuz and declining Russian supplies following Ukrainian attacks on oil refineries.The IEA says the combined disruptions have created unprecedented tightness in diesel markets in recent weeks, raising concerns about availability and cost of refined petroleum products.In a statement following the meeting, IEA Executive Director Fatih Birol said countries supported accelerating the emergency releases, with diesel given priority where possible.Birol wrote to member governments urging them to consider additional measures to expand and accelerate releases, noting that the March 2026 collective action remained underway.Participants expressed appreciation for the IEA’s response to the energy impacts of the Strait of Hormuz crisis.They emphasised their commitment to delivering on the March 2026 Collective Action and the importance of the IEA Secretariat’s role in continuing to monitor progress towards completion and providing up-to-date market analysis.To date, approximately 325 million barrels of oil have been released under the March 2026 Collective Action, with some countries having released greater volumes than initially pledged.The full release of all stocks pledged but not yet released under the March 2026 Collective Action would bring approximately 100 million barrels to the market.IEA member governments still have significant levels of publicly held emergency oil stocks, equivalent to around 1.1 billion barrels, including over 200 million barrels of diesel.Imports of refined petroleum products and international developments present a risk of higher import costs.However, Musenero’s statement to Parliament showed price increases experienced by consumers cannot be attributed to the Middle East crisis alone.According to Musenero, the shilling’s depreciation against the US dollar has increased domestic cost of imported petroleum products.She told Parliament the exchange rate had weakened from approximately Shs3,790 per US dollar at the beginning of September to about Shs4,035 by October 5.The movement, she said, translated into an estimated additional cost of about three hundred shillings per litre from the exchange-rate change alone.Because Uganda imports refined petroleum products, importers must pay for supplies in foreign currency or through arrangements linked to international currency markets.A weaker shilling consequently increases the amount of local currency required to purchase the same volume of fuel.Musenero also pointed to the Excise Duty (Amendment) Act, 2026, which introduced an additional two hundred shillings per litre in excise duty on petrol and diesel from July 1. The tax increase, combined with currency depreciation and international petroleum prices, has added to cost pressures reflected in domestic fuel prices.The minister said pump prices are influenced by several factors, including international product prices, exchange rates, procurement arrangements, transportation and logistics costs, financing expenses and commercial margins of individual oil marketing companies.Even if international diesel prices stabilise, continued weakness of the shilling could keep import costs elevated.Equally, an improvement in the exchange rate would not necessarily translate into immediate pump-price reductions if international prices, freight charges or other costs remained high.Despite pressure on prices, Musenero said existing fuel stocks were sufficient to meet national demand.Government has been working through the Uganda National Oil Company (UNOC) and its supply partners to secure petroleum products amid disruptions affecting international markets.Musenero said government was strengthening coordinated procurement and supply management, while pursuing alternative supply arrangements through Tanzania and engaging Kenya on a proposed Product Sharing Exchange Framework.Plans include exploring a refined-products pipeline and storage facilities at Tanga, alongside efforts to address logistical constraints along the Mombasa and Dar es Salaam supply corridors.Government is also pursuing improvements in inland storage infrastructure, including plans to expand petroleum storage capacity at Jinja and develop a larger storage and distribution terminal in the Kampala area.These measures are intended to strengthen supply security and reduce costs associated with transporting petroleum products from import points to consumers across Uganda.However, the distinction between adequate stocks and affordable fuel remains important. Sufficient supplies can prevent physical shortages without necessarily protecting consumers from higher prices when import costs rise.The IEA’s warning also highlights importance of composition of available supplies. Diesel markets can experience particular pressure when refinery operations and international trade in refined products are disrupted, even when oil continues to reach other parts of the global market.Musenero’s appearance before Parliament also raised questions about the role of UNOC in Uganda’s petroleum supply chain and whether its procurement arrangements are helping cushion consumers from international price shocks.Members of Parliament demanded a detailed breakdown of prices at which UNOC supplies fuel to oil marketing companies.The minister said UNOC’s coordinated procurement had helped cushion exceptional price increases earlier in the year. However, she had not yet received detailed selling-price information requested by MPs and undertook to provide it.Some legislators called for temporary tax relief or suspension of the increase, arguing the additional charge was worsening pressure on consumers.Others raised concerns about impact of depreciating shilling on wider economy.The debate was deferred pending a comprehensive government statement addressing the economy, including the exchange rate and its effects on fuel prices.The IEA’s coordinated emergency oil stock release is intended to provide additional supplies and ease effects of disruption to international oil flows.But emergency releases are a temporary measure. They cannot permanently replace regular shipments through major production and export centres or resolve all constraints affecting refineries and petroleum-product transportation.The agency’s renewed focus on diesel reflects importance of refined products to transport, industrial activity and other parts of the economy.-URNThe post Global Diesel Crunch Deepens Uganda’s Fuel Price Woes Despite Sufficient Stocks appeared first on Business Focus.