🇿🇲 VIEWPOINT | Fuel Markets, War Risks and Zambia’s Thin Margin of Safety
Government’s warning to fuel suppliers against hoarding reflects more than routine market discipline. It signals concern about speculation in a volatile global energy environment. Middle East tensions have already unsettled oil markets. Zambia sits far from the battlefield, yet the pump price remains the first place the shock will land.
Yesterday, Energy Minister Makozo Chikote moved quickly to calm the market. Zambia’s petroleum supply remains stable for now. Diesel stocks stand at 326 million litres, equal to about 60 days of cover. Petrol reserves sit at 32.8 million litres, roughly 19 days. Kerosene holds 14 days of supply, while Jet A-1 aviation fuel covers about nine days. Existing stocks were purchased at lower international prices. Immediate shortages remain unlikely.
The minister also warned filling stations against engineering artificial scarcity. Hoarding during geopolitical tension often precedes price spikes. Markets react quickly to perception. Panic buying or restricted retail supply can trigger shortages even when national reserves remain healthy.
But the global backdrop remains fragile.
The Strait of Hormuz, a narrow waterway linking the Persian Gulf to the open ocean, handles over 20 percent of global crude flows. War in the region threatens shipping routes, insurance premiums and freight costs. Economist Kelvin Chisanga notes the corridor’s strategic importance.
“The Middle East has a very important corridor which supplies about 30 percent of oil to the global market,” he said, warning fuel-importing economies such as Zambia remain exposed.
Oil markets have already moved. Prices swung sharply following US-Israeli strikes on Iranian nuclear facilities and retaliatory missile attacks across the Gulf. Washington reports more than 1,250 targets hit in early phases of the campaign. Iran responded with strikes against US-linked installations in Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE. Energy infrastructure and shipping lanes now operate under heightened risk.
Local pump prices had just begun easing before the conflict escalated. Petrol fell from K29.92 in January to K27.88 in February and K26.61 this month. Diesel dropped from K25.11 in January to K23.25 currently. A strengthening kwacha helped drive the reductions. Global instability now threatens to reverse those gains.
Chisanga warns fuel inflation moves quickly through the economy. Transport costs rise first. Food distribution follows. Manufacturing and agriculture absorb higher energy input costs. “Fuel contributed about 0.3 percent to inflation in February alone,” he said.
A sustained oil shock could lift inflation across multiple sectors.
Exchange-rate pressure adds another layer of risk. Zambia imports petroleum in foreign currency. Higher fuel bills raise demand for dollars. Rising import costs ripple through production and consumption, tightening liquidity in the foreign-exchange market. Strong copper prices provide some relief, though commodity gains rarely offset oil shocks immediately.
Government is exploring contingency routes. Talks with Dangote supply networks and alternative corridors such as Walvis Bay or regional sourcing from Angola remain on the table. Diversification reduces reliance on a single maritime corridor. Energy logistics now form part of national economic security.
Zambia holds one advantage: improved reserves. Foreign-exchange reserves stand near US$5.5 billion. Those reserves offer breathing space in the short term. They cannot permanently shield the economy from prolonged energy shocks.
Fuel prices often behave like an economic nerve. Small movements ripple across transport, food, industry and household budgets. War in the Gulf may feel distant. Economic transmission arrives quickly. Markets already show early tremors. Policy strategy and supply diversification will determine whether those tremors evolve into a full inflation wave.
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© The People’s Brief | Ollus R. Ndomu
Excellent brief.