Sri Lanka’s Fuel Problem Just Got Bigger: Oil Hits $110 as Two Shipping Routes Come Under Threat

Brent crude has climbed to around US$110 a barrel as the Middle East war disrupts shipping through the Strait of Hormuz and raises fresh concerns around the Red Sea. Sri Lanka has already spent US$3.62 billion on fuel imports in the first seven months of this year. The question now is not whether oil is expensive. It is how long Sri Lanka can absorb it.

Five numbers tell the story

$110 is no longer a distant possibility

There is something psychologically important about crossing US$100 a barrel. But for Sri Lanka, the round number itself is not the real story.

The real story is what is happening behind it.

Brent crude reached an intraday high of US$109.97 on Friday, according to Reuters, after rising sharply during the week. Brent was reported around US$108.44, while US West Texas Intermediate crude was around US$103.17.

Both benchmarks were on course for their first weekly close above US$100 since May. Brent had risen almost 13% over the week.

That is a very fast move for something as important to the world economy as oil.

Brent’s latest move

Selected Reuters-reported Brent levels. The final figure is an intraday high, not a settlement price.

Source: Reuters, September 10–11, 2026.

Two shipping routes are now part of the conversation

The Strait of Hormuz has been at the centre of the crisis for months.

Under normal conditions, roughly one-fifth of the world’s crude oil and LNG supplies pass through the waterway. It is one of the most important energy chokepoints on Earth.

Now traffic through the strait has fallen dramatically.

Reuters reported that only seven vessel transits were recorded on September 10, compared with a 10-day average of 15. Before the war, roughly 125 large commercial vessels could pass through the waterway each day.

Then came another development.

Iran-aligned Houthi forces seized Yemen’s port of Mocha and advanced along the Red Sea coast, raising fresh concerns about the safety of another important shipping corridor.

Sri Lanka was already paying much more for fuel before this latest jump

This is perhaps the most important number in the entire investigation.

According to the Central Bank of Sri Lanka, the country spent US$3.622 billion on fuel imports between January and July 2026.

That was 59.9% more than during the same period of 2025.

July alone accounted for about US$453 million, up 68% from July last year.

In other words, Sri Lanka’s fuel bill was already climbing rapidly before Brent moved towards US$110 this week.

The fuel bill has moved sharply higher

January–July fuel import expenditure. The 2025 figure is derived from the Central Bank’s reported 2026 value and 59.9% year-on-year increase.

Around half of Sri Lanka’s petroleum imports are exposed to the Middle East

Sri Lanka is a long way from the Persian Gulf.

Economically, however, it is much closer than the map suggests.

The IMF estimates that roughly 50% of Sri Lanka’s petroleum imports come from the Middle East.

That is a significant exposure for a country that imports virtually all of the energy it consumes.

The same IMF assessment points to other links as well. Around 40% of Sri Lankan workers’ remittances are connected to the Middle East, while the region is also an important aviation hub for Sri Lanka.

Source: IMF assessment of Sri Lanka’s exposure to the Middle East conflict. Percentages are approximate.

The oil bill is rising at the same time the trade deficit is widening

Sri Lanka’s merchandise trade deficit reached approximately US$6.5 billion during the first seven months of 2026.

During the same period last year, it was about US$3.9 billion.

The current account was also in deficit by approximately US$387 million during January–July.

Those figures do not mean Sri Lanka is running out of dollars. Far from it. Gross official reserves stood at around US$6.6 billion at the end of July.

But the country is trying to rebuild those buffers, not spend them unnecessarily.

A weaker rupee can make the same barrel cost more

Oil is traded internationally in US dollars.

That creates another layer of risk for Sri Lanka.

The Central Bank reported that the Sri Lankan rupee had depreciated 5.5% against the US dollar by the end of August on a year-to-date basis.

Put simply, if oil becomes more expensive in dollars while the rupee also weakens against the dollar, the local-currency cost of imported energy can come under pressure from both directions.

Today’s pump prices are only the starting point

Ceylon Petroleum Corporation’s published prices currently show:

But don’t make the mistake of assuming petrol will rise by 13%

Brent has risen almost 13% this week.

That does not mean Petrol 92 in Sri Lanka is about to rise 13%.

The price at the pump is affected by much more than the international crude benchmark. Refined-product prices, the exchange rate, freight, insurance, taxes, inventories and the Government’s pricing mechanism all matter.

This distinction is important because a good investigation should not turn a complicated economic chain into a dramatic but misleading prediction.

Finding the oil is only half the problem. Getting it here costs money too.

Shipping disruptions have another effect that is easy to miss when looking only at the Brent price.

Ships need fuel. They need insurance. They need crews. And when routes become dangerous, voyages can become longer.

Reuters reported that very-low-sulphur fuel oil prices in Singapore were more than 60% above pre-war levels as of September 10.

That does not automatically mean Sri Lanka’s next fuel shipment will cost 60% more. It does show how quickly the cost of moving energy around the world can change during a shipping crisis.

Someone eventually has to pay for a more expensive barrel

This is where the economic argument becomes a political one.

If international fuel costs rise sharply, the Government has broadly two choices.

There is no magic third option where the global oil price simply stops affecting Sri Lanka.

And there is a deadline approaching

The IMF’s latest assessment provides an important piece of context.

Sri Lanka’s temporary package of fuel, electricity, fertilizer and other support measures is capped at LKR 100 billion.

The package is scheduled to be phased out by the end of September 2026, or earlier if the ceiling is reached.

The IMF says the Government intends to return to cost-recovery fuel pricing while protecting vulnerable households through targeted support.

That was already going to be a difficult balancing act.

It becomes harder when the international oil price is moving towards US$110.

This is not 2022

It is worth saying this clearly, because comparisons with the 2022 crisis can become misleading very quickly.

Sri Lanka today has substantially stronger foreign-exchange reserves, stronger remittance inflows and a functioning fuel supply system.

There are also forward procurement arrangements for petroleum products.

The country is not currently facing the kind of nationwide fuel shortage that defined the worst months of 2022.

That is the good news.

The less comfortable news is that Sri Lanka is now being tested by a very different problem: how much it costs to keep an import-dependent economy running when energy becomes expensive.

2022 and 2026 are very different — but both show Sri Lanka’s vulnerability

Stronger reserves buy time. They do not make expensive oil free.

This is the point that can easily get lost in the debate.

Sri Lanka has more breathing room than it did four years ago.

But reserves are a buffer, not an income stream.

If the country continually has to spend more dollars importing fuel, those dollars have to come from somewhere — exports, tourism, remittances, investment or reserves.

And if the shock lasts long enough, the question stops being whether Sri Lanka can survive the next shipment.

It becomes whether the country’s external position can keep improving while paying a much higher energy bill.

The next fuel shock may not look like a fuel shortage

A person does not have to stand in a petrol queue to feel an oil shock.

What happens next depends on how long the war keeps the pressure on

Six numbers will tell us where this story is heading

Sri Lanka can probably absorb a spike. The real danger is if $110 becomes normal.

There is no evidence that Sri Lanka is returning to the fuel crisis of 2022.

But there is also no reason to pretend that a prolonged period of US$100+ oil would be painless.

Sri Lanka would have to spend more dollars on energy. Shipping could cost more. Businesses would face higher transport and production expenses. Inflation could become harder to bring down.

And the Government would eventually have to decide how much of that cost should be passed to consumers and how much should be absorbed by the state.

The immediate danger is not another fuel queue. It is a slow squeeze on the country’s dollars, businesses and household budgets.

Sources & further reading

Lakbima News prioritises official Sri Lankan data for domestic economic, fuel and foreign-exchange figures. Reuters is used for current international oil-market and shipping developments, while the IMF is used for Sri Lanka’s macroeconomic exposure and policy framework.

Editorial note: Oil prices, shipping conditions, exchange rates and geopolitical developments can change rapidly. This investigation reflects information available to Lakbima News on September 11, 2026. Scenario analysis is not a forecast, and figures identified as derived calculations are clearly labelled as such.