Gulf Conflict Shockwaves Reach Ethiopia's Economy and Energy Security

As reported by New Business Ethiopia

Summary

• The escalation of the US-Israel-Iran conflict beginning February 28, 2026, and the effective closure of the Strait of Hormuz sent global oil prices surging from $70 to $140 per barrel, creating significant shockwaves for Ethiopia's economy.
• Ethiopia imports all of its petroleum products, with approximately 90–95% entering through the Port of Djibouti. Rising fuel costs directly increase the price of transporting essential imports including wheat, cooking oil, and fertilizer across domestic markets, pushing up the cost of basic nutrition. The government responded with fuel price increases of up to 10 birr per liter and an emergency fuel conservation directive.
• The conflict also threatens Ethiopia's digital transformation ambitions and investment profile. More than 800 investors and development partners gathered at the Invest in Ethiopia 2026 forum amid heightened global uncertainty. Analysts note that what happens in the Gulf has a direct influence on Ethiopia's economic resilience.
• For BirrValue users, the oil shock creates upward pressure on inflation and import costs, which can affect the real value of remittances. Higher fuel and food prices erode purchasing power for birr recipients. Monitor exchange rates closely on [BirrValue](/banks) and consider timing transfers around rate movements.