The US-Israeli attacks on Iran have entered its second week without any clarity about what the immediate future holds in reserve. The price of crude has already crossed three-digit figures (as at 09th March 2026) in an extremely volatile market subject to wide variations on a daily basis. Bahrain and Kuwait have declared “force majeure”, a legal disposition whereby they would not be held responsible for failure to deliver on their commercial commitments in the oil market. Saudi Arabia is said to have started cutting crude output due to a lack of storage capacity in the absence of exports. The prospects of any improvement in the situation are getting dimmer by the day as it becomes clear that the whole strategy of the Iranians relies on creating havoc in the global oil market and the potential for serious threats to growth of the global economy. They calculate that this would result in forcing oil importing and dependent countries and major allies of the United States to put pressure on the US Administration to seek a rapid resolution to the conflict. As at time of writing this seems to have had some effect as President Trump in one more of his rather cryptic statements spoke of the war ending “very soon”.

For Mauritius which is totally dependent on import of petroleum products, mostly from the Middle East, this poses some serious threats with regards to four separate but intertwined issues. The first one concerns the resilience and viability of our supply chain logistics as embedded in our annual contractual agreements with our suppliers. The second is in relation to the impact of a sudden spike in international oil prices on the price of petroleum products (Mogas and Diesel) at the pump. A third, equally important consideration concerns the impact of a steep hike in Jet Fuel prices on the finances of the national airline given that fuel tends to be the second largest item of expenditure for airlines after labour. Last but not least is the procurement and supply of fuel oil for electricity production. The Central Electricity Board is dependent on these for around 45% of electricity produced.

In the following we shall examine two of the above, namely supply chain constraints and the eventual effects of the sudden price hikes on the price of fuel at the pump in Mauritius.

Supply chain constraints

It must be said at the outset that the most critical faultline in the supply chain of oil import and distribution in the island is not external. The biggest weakness is the lack of adequate storage facilities and resulting total dependence on the regularity of ships calling at the port at the right time. A real gamble if ever there was one and that too for procurement of an essential product for the country. The setting up of a 25,000 MT of storage capacity at MerRouge, known as MOST, about four years ago, dedicated to strategic reserves has certainly contributed to alleviate the situation concerning Diesel and Mogas in the present crisis. However, this is far from sufficient, especially in a world which is dominated by instability and continuous geo-strategic challenges.

With a storage capacity of about 40,000 MT of white oil products (Mogas, Diesel and Jet Fuel) in the country, including the reserves of the four major Oil companies, and a consumption of roughly the same quantity over a period of 25-30 days Mauritius will continue to gamble on the regularity of timely arrival of shipments.

Effects on pricing of mogas and diesel

Procurement of about 1.100,000 MT of petroleum products for local consumption is done through two annual tenders for white oil and black-oil (300,000 MT of fuel oil for the CEB) respectively. While the tender is allocated on the basis of the lowest quote for Premium (costs of freight, insurance and port charges etc) the actual price paid for the products are based on the internationally prevailing prices at the time of loading. One shipment of about 40,000 MT of products of white oil is loaded around every twenty days and one shipment of around 32,000 MT of black oil around every 35 days.

As per the statements made by ministers and officials recently there are one tanker of each being loaded right now at ports in the UAE and Oman respectively. This would mean that for these consignments we would unfortunately be facing a price of around USD100 per MT for gas oil and a higher price tag of USD 115-120 for diesel and Jet fuel. As for the next consignments of white and black oil these would be subject to the price fluctuations based essentially on the expectation of how long this conflict will last and the Strait of Hormuz remains practically closed to navigation.

In the face of such uncertainties and growing volatility the vital question of pricing at the pump for diesel and Mogas will become inevitable in the coming weeks if not days. In spite of the traumatizing environment, one should be careful not to fall prey to panic and consider the following attentively before reaching any decision.

PROCESS: In this situation of crisis this is not a matter which can be left to the normal process of price calculations usually adopted by the STC and the Petroleum Pricing Committee (PPC). In the present circumstances characterized by ultra-high volatility such formulaic calculations would inevitably be invalidated within a few days if not hours. There are too many known unknowns for this method to have any relevance for decision-making.

POLICY: It follows from the above that any decision concerning pricing of petroleum products would have to be a policy driven one based on available relevant and reliable data.

CONSIDERATIONS: Four principal factors need to be considered and views taken in order to reach a decision.

(I) How long more will the conflict last?

(II) For how long more will the Strait of Hormuz remain closed to navigation?

(III) What would be the extent of damage inflicted to the Oil producing facilities of the Middle Eastern producing countries?

(IV) What are our present suppliers telling us about their ability to deliver on their contractual obligations?

As already stated, the answers to the above questions are necessarily subjective and driven by judgement. Policy makers would probably be well inclined to consider group deliberations and consultations with all stakeholders before reaching some form of workable consensus and decision-making.

Unfortunately, there is absolutely no reason to believe that things are not going to get worse before they get better. Mauritius must therefore gear itself to face some serious consequences, not only as regards the impact on economic growth but also for the more immediate consequences on our day to day living conditions. Some countries, from South Korea and Japan to Pakistan and Bangladesh have already started resorting to emergency measures like closing Universities or resorting to work from home.