Uganda has begun to feel the ripple effects of escalating conflict in the Middle East, with fuel prices rising by 100 shillings per litre in response to a surge in global oil prices.
The increase comes as fears mount over the implications of the ongoing Israel-Iran confrontation, now entering its second week.
Economist Steven Mpuuga Kaboyo attributes the price hike to a 5% increase in global oil prices, now hovering around $80 per barrel.
"We've observed about a 5% jump in oil prices, and projections suggest this could double if the crisis deepens," Kaboyo said.
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"The direction of this war remains uncertain, and that unpredictability is already beginning to impact economies globally, continentally, and locally."
Kaboyo warned that further escalation could exert pressure on the Ugandan shilling, with rising demand for U.S. dollars likely to drive depreciation.
"If the Strait of Hormuz is blocked by Iran--something that's now being seriously discussed--it would be a major blow," he said.
"That narrow passage accounts for around 30% of global oil flows. Any disruption there will trigger ripple effects across Africa, including Uganda."
Despite these concerns, Uganda's Ministry of Energy has sought to reassure the public. Permanent Secretary Irene Batebe played down Iran's influence on global oil supply, arguing that the country's production is limited and unlikely to directly affect Uganda's energy security.
"Iran's contribution to global supply is minimal, and with OPEC's current spare capacity of about 6 million barrels per day, there's room to absorb shocks," Batebe said.
"We do not expect significant regional price shifts from this disruption alone."
She added that the ministry is actively monitoring the situation and developing contingency strategies.
"This is something we continue to assess closely," she said. "We are working to ensure that Uganda remains resilient in the face of external vulnerabilities."
However, Kaboyo believes the timing of this crisis could amplify economic risks, especially with Uganda heading into an election year.
"This is a critical period. The combination of political spending, inflationary pressure, and external shocks from the energy markets could spell trouble," he said.
Uganda last year signed a sole fuel importation deal with Vitol Bahrain in a bid to stabilize prices and cut out middlemen, who were accused of inflating costs.
But with global oil flows threatened by the Iran-Israel standoff, even such measures may not be enough to shield consumers from price volatility.
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While international actors call for de-escalation and diplomatic resolution, the path forward remains uncertain.
What is clear, however, is that continued instability in the Middle East will reverberate through fuel-dependent economies like Uganda--impacting prices at the pump, the strength of the currency, and the cost of living in the months to come.
