Petrol and diesel in Sri Lanka selling at Rs 398 and Rs 382 per litre as US-Israel-Iran conflict hurts country’s economy

The Sri Lankan government has warned that if the conflict in the Middle East becomes protracted, it will become increasingly difficult for the country to emerge from the economic crisis it faced in 2022.

Petrol, Diesel, Sri Lanka, US-Israel-Iran Conflict, Anura Kumara Dissanayake, Ceylon Petroleum Corporation, CPC, Middle East, Iran, United States, Israel, Strait of Hormuz, Singapore, Malaysia, South Korea — A sign reading ‘Closed’ is displayed at a Lanka IOC fuel station in Kotahena on the outskirts of Colombo on March 17, 2026. (Photo by Ishara S. KODIKARA / AFP)

New Delhi: Amidst a crisis in crude oil supplies, the Sri Lankan government has hiked petrol and diesel prices by up to 25%. Following the price revision implemented today, March 22, the cost of regular petrol in Sri Lanka has surged by 81 Sri Lankan rupees to reach 398 rupees per liter. Meanwhile, diesel prices have risen by 79 rupees, climbing to 382 rupees per liter.

This marks the second time in the last two weeks that petrol and diesel prices have been increased. Previously, last week, prices were hiked by 8%. Observing the deteriorating situation, President Anura Kumara Dissanayake has implemented a ‘4-day working week’ (working only four days a week) across the country and has urged companies to revert to a ‘work-from-home’ mode.

Work-from-Home Directives Issued to Conserve Fuel

An official from the Ceylon Petroleum Corporation (CPC) stated that the primary objective behind this significant price hike is to reduce the country’s fuel consumption by 15 to 20%. President Dissanayake had already issued an order last Wednesday mandating a four-day workweek for both government and private offices.

Additionally, companies have been instructed to allow employees to work from home wherever feasible, in order to reduce vehicular traffic on the roads and conserve fuel.

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Strait of Hormuz blockade

The primary reason behind Sri Lanka’s current predicament is the ongoing conflict in the Middle East involving Iran, the United States, and Israel. As the conflict enters its fourth week, Iran has effectively blocked the ‘Strait of Hormuz.’

This is the very maritime route through which approximately 20% of the world’s total oil exports typically pass during peacetime. Sri Lanka imports coal to generate all the electricity it requires and to meet its fuel needs; consequently, a disruption in supplies has raised the danger of the country running out of its existing stocks.

Fears of a 2022-style ‘Default’ Resurface

The Sri Lankan government has warned that if the conflict in the Middle East becomes protracted, it will become increasingly difficult for the country to emerge from the economic crisis it faced in 2022. It is worth noting that in 2022—following the depletion of its foreign exchange reserves—Sri Lanka declared a ‘sovereign default’ on its foreign debt, which totalled $46 billion.

Oil Imports from Singapore and Malaysia

Sri Lanka imports crude oil for its refinery operations from the Middle East, while relying on Singapore, Malaysia, and South Korea for refined petroleum products. The country’s sole oil refinery—originally built by Iran—is currently grappling with a shortage of crude oil. Just last week, the government began fuel rationing measures to ensure that adequate stocks remain available for essential services.

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The Times Of Bengal