Sri Lanka braces for food, energy supply shocks amid widening Middle East conflict

Colombo, March 9 (Daily Mirror) - Amid the widening conflict in the Middle East, the Sri Lankan government is bracing for possible disruptions to energy and essential food supplies and potential price spikes in the months ahead, though there is no immediate major threat.

Naval traffic through the Strait of Hormuz has been paralysed. It is a major shipping chokepoint in the world, responsible for around 20 percent of global oil consumption.

Maritime insurance premiums for war coverage are surging—in some cases by more than 1,000 percent—dramatically driving up the cost of moving energy through this critical maritime corridor, according to reports by Reuters.

A spokesman for the Essential Food Commodities’ Importers and Traders Association said prices in the local market have already increased by 5–10 percent due to higher freight charges and the depreciation of the rupee.

“We paid Rs. 311 for one US dollar last Thursday for the clearance of imported items. We paid Rs. 312 last Friday. It may increase further this week. In addition, we have to bear higher freight charges as the conflict widens in the Gulf,” he said.

Sri Lanka imports most essential food items such as sugar, lentils, onions, canned fish and spices. These imports are mainly sourced from countries such as India, Pakistan, Bangladesh, Canada and Australia.

Against this backdrop, the Food Security Committee met last Friday. Trade, Commerce and Food Security Minister Wasantha Samarasinghe sought a report from the relevant agencies regarding the requirement for six grain varieties such as green gram, black gram and cowpea.

Authorities are assessing the quantities of these items produced locally. The government needs this information to obtain a clear picture of the remaining requirement that will have to be met through imports to address rising demand during the upcoming festive season and ensure preparedness for any emergency, an official who attended the meeting said.

Explainer: What is the Strait of Hormuz? How will its closure impact oil prices? Click here to read more