Kampala, Uganda – The Ministry of Energy and Mineral Development in Uganda has expressed concern over the recent surge in fuel prices in the country. While specific figures were not disclosed, the ministry attributed the price increases to global dynamics affecting the oil market.
One major factor cited by the ministry is the growing demand for oil on the global stage. In June, global oil demand reached a staggering 103 million barrels per day, surpassing the earlier projected annual figure of 102.1 million barrels per day, according to data provided by the International Energy Agency (IEA). Experts anticipate that August figures will be even higher, with an estimated increase of 2.2 million barrels per day in the latter half of 2023, before dropping to 1 million barrels per day in 2024.
However, the ministry, in alignment with the IEA’s assessment, predicts that oil prices are poised to climb further due to a decrease in oil production. The Organization of the Petroleum Exporting Countries (OPEC) and its allied partners (OPEC+) have implemented supply cuts amounting to approximately 2.2 million barrels per day in the current quarter and a further reduction of 1.2 million barrels per day in the final quarter. Seasonal variations in Europe and the United States, foreign exchange rate fluctuations, and the notable upswing in oil prices, guided by Platts assessments, also play pivotal roles in this price hike.
In June, the global oil supply stood at 101.8 million barrels per day but is expected to decrease in the coming months due to OPEC+’s supply cuts commencing in September.
Furthermore, the ministry highlighted the influence of foreign exchange rate fluctuations and the prices of Brent crude oil on fuel costs in Uganda. The exchange rate against the US dollar increased from Shs3615 in July to Shs3,725 in August, impacting fuel pricing. Meanwhile, the price of Brent crude oil per barrel surged from $74.35 (approximately Shs280,000) in July to $82.45 (about Shs301,000) in August.
The ministry also emphasized that refined petroleum product prices, as guided by Platts, a global provider of commodity and energy information, and benchmark price assessments, have seen substantial increases. Diesel prices soared by $135 (about Shs499,400) per metric tonne, while petrol prices jumped by $67 (Shs247,900) in August compared to July. These price hikes directly affect the cost of fuel imported into Uganda, thereby influencing domestic fuel prices.
While Uganda remains competitive in fuel pricing compared to neighboring countries, the ministry underscored the importance of closely monitoring these factors. It reaffirmed its commitment to vigilantly monitoring the global oil market and exploring strategies to secure the supply of petroleum products in Uganda, as fuel scarcity could potentially trigger a pricing crisis in the country.
As Ugandans grapple with rising fuel prices, the Ministry of Energy and Mineral Development’s efforts to stabilize the situation and ensure a steady supply of fuel remain crucial in mitigating the impact on the economy and citizens.
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