Pray Middle East conflict does not affect oil prices

The Russia-Ukraine war severely impacted Malawi’s agro-based economy by driving up fertiliser and fuel costs, exacerbating food insecurity and increasing inflation. For example, the cost of fertiliser tripled, impacting crop yields and worsening food security. Soaring fuel and commodity prices caused inflation to peak, reducing purchasing power.

Import channels for wheat, which accounted for a significant portion of local consumption, were broken. The government faced higher import bills and reduced foreign exchange, weakening the overall economic position. Unfortunately, the Tonse regime was ushered into power on the promise of change.

They volunteered a long list of things they would achieve if Malawians gave them the vote. Some of these things were cheaper fertiliser, fuel, affordable prices of commodities, creation of one million jobs, especially for the youths. They also spoke about rooting out corruption, reducing presidential powers, and bringing accountability to government, clearing what they called ‘the rubble of impunity’ and delivering development that touches ordinary lives.

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Of course, they failed on most of the crucial promises. Food, fuel, forex and fertiliser shortage was the order of the day for the most part of the party’s rule. With those promises and more, the party reclaimed power with 56.8 percent of the vote against the incumbent Lazarus Chakwera of the Malawi Congress Party (MCP) who secured 33 percent.

But since the party rose to power, fuel prices have gone up by a total of 65 percent—from K2 734 per litre for diesel and K2 530 for petrol to K4 500 and K4 495 for diesel and petrol, respectively. Forex shortage remains a nightmare. Will history repeat itself?

Pray the escalating conflict between the United States, Israel and Iran does not disrupt energy supplies from the Middle East where Malawi’s oil comes from. Already global oil prices rose sharply on Thursday heightening fears of prolonged energy supply disruptions from the Middle East. Markets remain on edge as tensions intensify around the Strait of Hormuz, a key shipping route for global oil trade.

Analysts say any sustained disruption in the narrow waterway could significantly affect global supply flows. Fuel is a strategic commodity. Any rise in oil prices affects the economy by making things such as motor fuel, transport and food more expensive. The overall effect is that fuel price rises erode household purchasing power.

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