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Fuel Prices Surge in Uganda

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fuel prices surge in uganda
fuel prices surge in uganda
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Highlights:

  • Fuel Prices Soar: Petrol Reaches Shs 5,400 per Liter
  • Rising Global Factors Push Uganda’s Fuel Prices to New Heights
  • Country Grapples with Soaring Fuel Costs from Kenya

Fuel prices in Uganda have surged to unprecedented levels, with petrol now selling at Shs 5,400 per liter and diesel at Shs 4,800 per liter. This increase in prices was confirmed by major petrol stations like Shell Mulago and local stations like City Oil Kamwokya.

The surge in fuel prices follows a government statement issued on September 5, 2023, by the State Minister of Energy and Mineral Development, Sidronius Okassai. Minister Okassai stated that the government would not intervene in fuel pricing and attributed the rising costs to external factors.

According to Minister Okassai, the global surge in oil prices, driven by increased oil demand, especially during the summer months in Europe and the United States, has significantly affected fuel prices worldwide. Economic activity and seasonal trends have also played a role in the global increase in fuel costs.

In addition to these factors, the exchange rate has also played a significant role in the increase in Uganda’s fuel prices. The US dollar is now trading at Shs 3,770, up from Shs 3,719 on September 1, 2023, impacting fuel prices negatively.

Furthermore, the decision of the OPEC+ cartel to reduce oil production by three million barrels per day, with the aim of stabilizing and increasing oil prices, has had a direct influence on the market. Brent crude oil prices have reached $92 per barrel, while OPEC members have priced it at $96.62 per barrel, a significant increase from the 2020 benchmark oil price of $68 per barrel. OPEC has extended its production cut until 2024 due to unfavorable market conditions.

The ongoing conflict between Russia and Ukraine has also contributed to the surge in fuel prices. Russia’s reduction in Urals crude production, in response to Western-imposed oil price caps, has further tightened the global oil supply, leading to increased oil revenues for Russia.

Despite these developments, neither the public relations officer of Total Energies nor the Ministry of Energy and Mineral Development has provided a response regarding the elevated fuel prices.

It is important to note that Uganda operates a liberal economy, and the government does not have direct control over fuel market prices. These prices are determined by supply and demand dynamics. Currently, Uganda imports its fuel from Kenya, which is reported to be the most expensive source in the East African region.


Fuel Prices in Uganda (October 4, 2023)

Fuel Type Price per Liter (Shs)
Petrol 5,400
Diesel 4,800

 

Factors Contributing to Fuel Price Increase

Factors Impact
Global oil demand increase Significant impact on oil prices
Exchange rate fluctuations Negatively affecting fuel prices
OPEC+ production cuts Influencing global oil prices
Russia-Ukraine conflict and oil production Tightening global oil supply, increasing Russia’s revenues
Market dynamics and liberal economy in Uganda Determining fuel prices based on supply and demand

Source: Uganda Ministry of Energy and Mineral Development

Note: All prices and information are as of October 4, 2023.