In late February 2026, hostilities between the United States, Israel and Iran escalated, with the ripple effects hitting global energy markets. The US and Israel attacked Iran, and Iran fought back. Iran retaliated by attacking US allies in the area and also ships passing through the Strait of Hormuz.

The narrow chokepoint became the epicentre of the crisis. In 2025, the amount of crude oil passing through the Strait of Hormuz stood at 20 to 21 million barrels per day (mb/d).

Iran’s blockade of the passage, which accounted for around 20% – 25% of global seaborne oil trade in 2025, saw trade volumes plummet.  Tanker traffic plunged from over 100 transits a day to a near standstill during peak disruption periods, and insurance costs sharply rose.

Gulf producers, who account for roughly 25% of the world’s crude oil, slashed output by millions of barrels per day (bpd).

Saudi Arabia, for example, was producing 10.1 million bpd but reduced it to 6.9 million bpd. The United Arab Emirates also reduced oil production from 3.4 million bpd to 2.2 million bpd. Iraq’s oil production went down from 4.1 million bpd to 1.5 million bpd. Kuwait’s oil production went down to 0.56 million bpd from 2.6 million bpd.

The reason they had to reduce oil production was that they did not have ways to export the oil.

The price of oil, which was around $70 to $75 per barrel, went up to over $100 per barrel and even reached $120 per barrel by April.

This had an impact on East Africa. Most countries in the region import nearly all their refined petroleum products, and they felt the pain right away.

Import bills shot up, foreign exchange reserves came under heavy pressure, and fuel prices at the pump jumped dramatically within weeks.

In Kenya, President William Ruto asked for calm while announcing cushioning measures. Kenya was not the only country that was affected. Other countries like Uganda, Tanzania, Rwanda, Ethiopia and their neighbours also felt the pinch.

The Strategic Strait of Hormuz: A Critical Global Chokepoint

Located between Iran and Oman, the Strait of Hormuz is one of the most critical energy arteries in the world. At its narrowest point, it measures just 33 kilometres wide, creating a natural bottleneck for the massive volumes of oil and gas that pass through it every day.

According to the United States Energy Information Administration, 20.9 million barrels of oil passed through the Strait of Hormuz every day in the first half of 2025. The Strait is also a crucial route for liquefied natural gas tankers carrying cargoes from Qatar and the UAE.

However, this is not the first time the Strait has found itself at the centre of a conflict. During the 1980s Tanker War, part of the larger Iran-Iraq conflict, merchant vessels were regularly attacked in the Persian Gulf and Hormuz, disrupting global shipping for years.

Iran has always understood its strategic advantage in the area. For decades, it has maintained the ability to mine the waters or launch missile strikes from its coastline, a threat that became very real in the 2026 crisis. Iranian forces declared blockades and attacked vessels, making transit unsafe and effectively halting the flow.

There are alternative routes like Saudi Arabia’s East-West pipelines and overland pipelines in the UAE, but they cannot handle the massive volumes of the Gulf countries’ exports.

According to the United Nations Conference on Trade and Development (UNCTAD), the disruption sharply spiked the war-risk insurance premiums and shipping costs, forcing some tankers to reroute around Africa via the Cape of Good Hope. The longer trips increase thousands of nautical miles and a jump in costs due to higher fuel consumption by tankers and a week of transit time.

According to estimates, shipping traffic through the strait decreased by over 94% compared to previous years, creating a supply shock. Global markets moved from risk pricing to dealing with actual shortages. 

Storage facilities in the Gulf began to fill, and the estimate of shut-ins in the region ranged between 7 mb/d and 16 mb/d during the peak disruption period. 

The crisis was further exacerbated through secondary impact, including force majeure declarations, damage to facilities, rerouting of vessels and increased tensions in related chokepoints like the Bab al-Mandeb Strait. The LNG market and fertiliser markets, which rely on transit through the strait, also experienced considerable pressure. 

In East Africa, the landing costs of refined fuels, mostly imported from or through the Middle Eastern benchmarks, rose rapidly. Most countries in the region have minimal domestic production and limited refining capacity.

The region’s theoretical refining capacity is around 263,000 bpd, but the actual output is around 26,400 bpd, mostly limited to Sudan and South Sudan, and covers less than 5% of demand. 

In Kenya, the Mombasa refinery ceased processing operations in 2013 and is only used for storage.

A Surge in Fuel Prices across East Africa: A Comparative Look 

Fuel prices at the pump varied noticeably across East Africa. Some countries felt the pinch much harder than others, largely because of differences in taxation, the strength of local currencies, government subsidies, and the extra logistical headaches faced by landlocked nations.

In early February, before the Hormuz crisis really kicked in, super petrol in Kenya was selling for around $1.41 per litre, while diesel went for about $1.32. By June, their prices rose to up to $1.65 and $1.88, respectively. The country recorded one of the sharpest diesel price increases, up to 45% in some cycles.

In Rwanda, the numbers really stung. Petrol shot up from around $1.40 in early March to $1.97 per litre by mid-May, while diesel climbed from $1.32 to $1.48. Rwanda is landlocked and absorbs extra transport costs all the way from the ports, and that extra burden reflected at the pump.

Tanzania didn’t escape either. Diesel prices rose from $1.35 to $1.70, and petrol went from $1.40 up to $1.65. Still, the country fared a bit better than some of its neighbours, partly because it has its own port.

Uganda came out looking relatively lucky. Petrol increased from $1.40 to $1.70, and diesel moved from $1.35 to $1.51. Fuel stayed cheaper there compared to Kenya, with analysts pointing to better supply arrangements and slightly kinder tax policies as the main reasons.

In Ethiopia, heavily subsidised petrol retailed at $1.00 pre-conflict, nominally rising to $1.15. However, the country experienced severe shortages.

Chain Reaction: From Global Crude to Local Economies

The rise in the price of crude oil quickly resulted in higher import bills for countries in East Africa. This translated into rising transport costs, driving up the prices of almost everything on the shelves.

Food inflation became a major concern as transportation costs take up a big chunk of food prices in the region. Diesel, the main fuel for heavy trucks, got significantly more expensive, raising the cost of transporting produce from farms to markets. Farmers had had to deal with higher input costs for fuel, fertiliser and other items.

Manufacturers and industries faced elevated electricity and logistics bills, which ate into profits and forced many to pass costs on to consumers.

Power suppliers, who often rely on diesel generators as backup when the grid falters, saw running costs rise.

For households, especially low-income ones, the combination of higher prices and stagnant or falling incomes was brutal. Many families cut back on meals, school fees, and medical care, widening inequality.

The economy took a hit too as foreign exchange reserves came under pressure, currencies faced depreciation risks, and GDP growth slowed. The IMF and UNCTAD had already warned that big net importers like those in the region would struggle with rising costs for imported goods.

Social and Political Fallout

In Kenya, one of the hardest-hit sectors was the public transport sector. The operators had to contend with higher operational costs. Caught between a populace unwilling to pay extra and rising fuel costs, they went on strike in May 2026.

Transport was paralysed in the capital, Nairobi, and other major towns, leaving commuters stranded. Tensions boiled over, and the resulting protests turned violent, with at least four people killed and dozens injured. President William Ruto held talks with transport stakeholders and adjusted fuel prices to calm the situation.

In Ethiopia, the government called for reduced operations to conserve fuel reserves. A drop also hit the country in remittances from Gulf workers, which contribute around 5% of GDP.

Mitigation Measures

Kenya implemented several measures to ease the pressure, including subsidising costs through the Petroleum Development Fund. The government spent billions to stop diesel from crossing the KSh 270 per litre price. President Ruto’s government also cut VAT on fuel from 16% to 8% for three months.

On the energy front, the government withdrew a tariff review application submitted by Kenya Power, halting proposed base tariff increases of up to 31.8% set to take effect in July, through to June 2029. Energy and Petroleum Cabinet Secretary Opiyo Wandayi cited the need to cushion households, businesses and industries from higher costs while also supporting job creation and economic growth.

After the aforementioned negotiations with transport operators, the government ordered an extra $0.077 cut in diesel prices during the June-July pricing cycle.

Controversial G-to-G Deal with Saudi Arabia and UAE

Unlike some of her neighbours, Kenya avoided outright fuel shortages by tapping into strategic reserves and using Government-to-Government (G2G) deals for guaranteed supplies.

The G2G deals were sold as a way to stabilise foreign exchange and secure supply, offering six-month credit terms.

Supporters of the deals argue that they were effective, as Kenya didn’t suffer the severe shortages seen elsewhere. However, the deals faced heavy criticism and scrutiny for being opaque. Few details were made public on the agreement, and opponents called them potential scams – there were claims that private marketers were pocketing margins while ordinary Kenyans paid high prices and carried the risks.

There were growing demands for Parliament and auditors to investigate the shipments, scrutinise the contract terms, and clarify the role of the National Oil Corporation of Kenya (NOCK).

Renewable energy and long-term resilience

East African countries hold vast renewable potential to break this cycle. Kenya leads in geothermal energy, Ethiopia has enormous hydropower resources, while countries like Tanzania, Uganda, and others enjoy abundant solar and wind capacity. Senior energy economist Kennedy Omondi told Open African Tribune – East that the crisis is a wake-up call for the region.

“The crisis underscored the vulnerabilities of fossil fuel imports. Potential mitigation measures include investments in solar mini-grids, encouraging electric mobility through incentives such as Kenya’s duty-free EV policy, clean cooking, and geothermal expansion. However, there are challenges, including high upfront capital, grid infrastructure, and financing gaps.”

Omondi highlights possible solutions, including regional power pools, exploring the potential of green hydrogen, and exploiting AfCFTA-enabled trade in clean tech. Complementary measures include increasing strategic reserves, diversifying suppliers, and constructing joint, regional refineries and pipelines.

“In essence, the lessons learned emphasise the building of buffers, transparency in deals, as well as proactive diversification beyond fossil fuels,” Omondi says.

Even though it was painful, the 2026 crisis has served as a much-needed wake-up call for East Africa. The region needs to capitalise on the abundance of natural resources and invest more in innovation in the energy space.

The ultimate goal is to reach a point where conflicts happening thousands of kilometres away no longer dictate the cost of fuel at the pump, the price of food on the table, or the daily struggles of ordinary East Africans.