Global vessel shortage hits Sri Lanka fuel imports amid Middle East crisis

By Kelum Bandara

The shortage of vessels amid the Middle East crisis has hampered fuel imports for Sri Lanka, with the government now trying to discourage consumption as much as possible.  

Since the start of the US-Israeli war against Iran, more than 1,000 cargo ships, mainly oil and gas tankers, have been blocked from transiting the Strait of Hormuz. This has already created a significant global economic impact.  

Oil and natural gas prices have increased sharply since the war began. Brent crude futures are up by more than 40% since the start of hostilities on 28 February. Some markets for oil products have also been particularly affected, including those for diesel and jet fuel. The impacts are being felt globally, according to the International Energy Agency (IEA).  

Crude and oil product flows through the Strait of Hormuz have plunged from around 20 million barrels per day (mb/d) before the war to a trickle at present. With traffic halted, limited capacity to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d, according to the latest Oil Market Report published on 12 March. In the absence of a rapid resumption of shipping flows, supply losses are set to increase, the IEA said. Meanwhile, President Anura Kumara Dissanayake said on Tuesday evening that two shipments already ordered would be delayed. 

An informed source said that two shiploads of fuel ordered by Sinopec and RM Parks would arrive soon. In addition, a shipment ordered by Lanka Indian Oil Company (LIOC), which is responsible for around one-fourth of local fuel distribution, is expected to arrive within a few days.