Ethiopia imposes fuel rationing as global oil disruptions bite

The Government of Ethiopia has introduced emergency measures to manage a worsening fuel crisis, driven by global oil supply disruptions linked to the ongoing conflict involving Iran, the United States, and Israel.

The crisis has prompted immediate action across state institutions. The Ethio Engineering Group has instructed its more than 3,000 employees to shift to virtual meetings to reduce fuel consumption. Additional measures include mandatory carpooling for essential duties, restricting vehicle use to standard working days, and cutting fuel allowances for senior management.

On March 17, 2026, the Ethiopia Petroleum and Energy Authority (PEA) issued a nationwide directive requiring oil companies and fuel stations to implement strict conservation measures. The directive prioritizes fuel distribution to critical sectors such as healthcare, agriculture, and public transportation to ensure continuity of essential services. A day earlier, authorities had appealed to citizens and institutions to curb non-essential fuel use. The government has also intensified monitoring of fuel supply chains and stepped up enforcement against hoarding and illegal fuel trading, signaling growing concern over supply management and market stability.

The measures come as Ethiopia faces one of its most severe fuel shortages in recent years. Long queues have formed at petrol stations across major cities. In Addis Ababa, motorists report waiting for hours to refuel, with some stations running out of fuel before new deliveries arrive.

The crisis is largely driven by external factors. The expanding conflict in the Middle East which has been ongoing for the past few weeks and whose end remains uncertain has significantly disrupted global energy markets. In response to escalating air campaigns, Iran has closed the Strait of Hormuz as a form of strategic leverage, raising fears of a major chokehold on global supply chains.

This waterway is a critical transit route for a substantial share of the world’s oil supply. Heightened security risks and rising shipping costs have slowed deliveries and increased import prices, particularly for fuel-dependent countries.

Ethiopia, like many countries in the region, lacks significant domestic oil production and relies almost entirely on imported petroleum. Most of these imports enter through the Djibouti Corridor, making it a vital but vulnerable supply route. This heavy dependence on a single corridor has increased exposure to global disruptions, with delays quickly translating into domestic fuel shortages.

The impact is already being felt across the economy. Public transport services have been reduced, while freight operators report delays in the movement of goods, raising concerns about broader supply chain disruptions. Rising fuel costs are also contributing to inflationary pressures. Higher transportation expenses are driving up the prices of food and essential goods, placing additional strain on households. Small businesses, particularly those dependent on transport and fuel-powered generators, are facing mounting operational challenges.

To cushion the impact, the government has expanded fuel subsidies. However, maintaining these subsidies amid persistently high global prices could place significant pressure on public finances and foreign currency reserves. Despite these measures, the near-term outlook remains uncertain. Much will depend on developments in the Middle East and their impact on global energy markets. Prolonged disruptions could lead to continued shortages, fuel rationing, and sustained price pressures.