Uganda’s rising fuel prices are coming under renewed pressure from tightening global diesel supplies, a weakening shilling and higher domestic taxes, as the International Energy Agency (IEA) urges governments to accelerate emergency oil stock releases to ease disruptions in international markets.
Energy minister Monica Musenero told parliament last week that pump prices had risen to between Shs 6,800 and Shs 7,000 per litre, driven by a combination of international supply disruptions, currency depreciation and increased domestic taxes.
She said Uganda’s fuel stocks remained sufficient to meet national demand but acknowledged that the government had limited direct control over pump prices because the country operates a liberalised petroleum market in which oil marketing companies set their own prices.
The IEA’s latest warning highlights the international pressures facing fuel-importing countries such as Uganda, where the cost of imported petroleum products is affected by global market prices, exchange rates and transportation expenses.
At a meeting on Sunday, the agency urged member governments to accelerate emergency oil stock releases and prioritise diesel supplies in response to disruptions in the Strait of Hormuz and reduced Russian supplies following Ukrainian attacks on oil refineries.
The IEA said the combined disruptions had created unprecedented tightness in diesel markets in recent weeks, raising concerns about the availability and cost of refined petroleum products.
In a statement following the meeting, IEA executive director Fatih Birol urged governments to consider additional measures to expand and speed up the releases, noting that the collective action launched in March 2026 was still under way.
Member governments reaffirmed their commitment to completing the March initiative and emphasised the IEA Secretariat’s role in monitoring progress and providing updated market analysis.
About 325 million barrels of oil had been released under the initiative by the time of the meeting, with some countries releasing more than they had initially pledged.
The agency said releasing the remaining pledged stocks could bring approximately 100 million additional barrels to the market.
IEA member governments also retain substantial publicly held emergency oil reserves, estimated at about 1.1 billion barrels, including more than 200 million barrels of diesel.
The emergency releases are intended to increase available supplies and ease market pressure, although their impact on prices in individual countries will depend on international product prices, exchange rates, shipping costs and domestic taxes.
Shilling depreciation adds to fuel costs
In Uganda, Musenero told parliament that international market developments alone could not explain the increases in pump prices.
She said the depreciation of the shilling against the US dollar had raised the domestic cost of imported petroleum products, with the exchange rate weakening from approximately Shs 3,790 per dollar at the beginning of September to about Shs 4,035 by October 5.
According to the minister, the exchange-rate movement alone translated into an estimated additional cost of about Shs 300 per litre.
Because Uganda imports refined petroleum products, importers must pay for supplies in foreign currency or through arrangements linked to international currency markets. A weaker shilling therefore increases the amount of local currency required to purchase the same volume of fuel.
The minister also cited the Excise Duty (Amendment) Act, 2026, which introduced an additional Shs 200 per litre in excise duty on petrol and diesel effective July 1.
The tax increase, combined with currency depreciation and international petroleum prices, has added to the costs reflected in domestic pump prices.
Musenero said the final price charged at the pump depends on several factors, including international product prices, exchange rates, procurement arrangements, transportation and logistics, financing expenses and the commercial margins of individual oil marketing companies.
These factors mean that a stabilisation in international diesel prices would not necessarily translate into immediate relief for Ugandan consumers if the shilling remained weak or freight, financing and other supply-chain costs stayed elevated.
Conversely, an improvement in the exchange rate would not automatically guarantee lower pump prices if international prices or other costs continued to rise.
Government pursues alternative supply routes
Despite the pressure on prices, Musenero said Uganda’s existing fuel stocks were sufficient to meet national demand.
The government has been working through the Uganda National Oil Company (UNOC) and its supply partners to secure petroleum products amid disruptions in international markets.
Musenero said the government was strengthening coordinated procurement and supply management, pursuing alternative supply arrangements through Tanzania and engaging Kenya on a proposed Product Sharing Exchange Framework.
The plans include exploring a refined-products pipeline and storage facilities at Tanga, alongside efforts to address logistical constraints along the Mombasa and Dar es Salaam supply corridors.
The government is also pursuing improvements in inland storage infrastructure, including plans to expand petroleum storage capacity at Jinja and develop a larger storage and distribution terminal in the Kampala area.
The measures are intended to strengthen supply security and reduce the costs of transporting petroleum products from import points to consumers across the country.
However, adequate stocks do not necessarily translate into affordable fuel. Maintaining sufficient supplies can prevent physical shortages, but consumers may still face higher prices when import costs rise.
The IEA’s focus on diesel also reflects the particular vulnerability of refined petroleum products to disruptions in refinery operations and international trade. Crude oil may continue reaching some markets even as the availability of specific refined products tightens.
UNOC procurement under scrutiny
Musenero’s appearance before parliament also prompted questions about UNOC’s role in the petroleum supply chain and whether its procurement arrangements were helping shield consumers from international price shocks.
Members of parliament demanded a detailed breakdown of the prices at which UNOC supplies fuel to oil marketing companies.
The minister said coordinated procurement through UNOC had helped cushion exceptional price increases earlier in the year. However, she had not yet received the detailed selling-price information requested by legislators and undertook to provide it.
Some MPs called for temporary tax relief or suspension of the recent increase in excise duty, arguing that the additional charge was worsening the financial pressure on consumers.
Others raised concerns about the wider economic consequences of the depreciating shilling, which increases the local-currency cost of imports beyond petroleum products.
The parliamentary debate was deferred pending a comprehensive government statement on the economy, including the exchange rate and its effects on fuel prices.
The outcome could help clarify the extent to which the government can use taxation, procurement arrangements and supply-chain improvements to cushion consumers against further increases.
For now, the IEA’s emergency stock releases offer a temporary intervention intended to increase supplies and ease the effects of disruptions to international oil flows.
However, emergency reserves cannot permanently replace regular shipments through major production and export centres or resolve all the constraints affecting refineries, shipping and petroleum-product transportation.
For Uganda, the outlook for pump prices will therefore depend not only on whether international diesel supplies improve, but also on the movement of the shilling, domestic tax policy and the cost of securing and distributing imported fuel.
With diesel essential to road transport, industrial activity and other parts of the economy, sustained increases could have implications beyond the fuel pump, adding to operating costs for businesses and potentially increasing the prices of goods and services.