A narrow stretch of water between Iran and Oman is once again shaping the price of a litre of petrol at filling stations across Dar es Salaam.
The Strait of Hormuz may be thousands of kilometres from Tanzania’s coast, but its stability directly influences what Tanzanians pay for fuel, food, and transport.
Tanzania imports more than 95% of its petroleum products, and a significant share of that fuel passes through the Strait of Hormuz before being refined and shipped to Dar es Salaam.
When shipping lanes face delays, naval escorts, or insurance hikes due to geopolitical risk, freight costs climb. Those costs are passed down to Tanzanian importers, fuel stations, and ultimately to consumers at the pump.
The immediate impact is on fuel prices. Diesel and petrol account for nearly 25% of Tanzania’s import bill.
A sustained increase in global oil prices of even $10 per barrel can push domestic fuel prices up by 5-8%, depending on exchange rate movements and government subsidies. For a transport-dependent economy, that increase ripples through every sector.
Transport operators feel it first. Daladala operators in Dar es Salaam, long-distance bus companies on the Central Corridor, and truckers hauling cargo from Dar es Salaam Port to Rwanda, Uganda, and the DRC all face higher operating expenses.
Many respond by raising fares or freight rates, which then increases the cost of moving food, building materials, and manufactured goods.
Tanzanians are already voicing frustration. “The daladala fare from Ubungo to Kariakoo goes up by 200 shillings. My salary hasn’t changed, but I’m paying more just to get to work,” says Neema Joseph, a market vendor in Dar es Salaam.
Long-distance traveler James Mwakalinga adds, “The bus ticket from Dar to Dodoma was 35,000 shillings last month. Now it’s 45,000. We have no choice but to pay if we want to travel.”
Transporters themselves say they are caught in the middle. “We cannot absorb the fuel costs anymore. A full tank for my daladala used to cost 180,000 shillings. Now it’s nearly 280,000,” says Ibrahim Ramadhani, a daladala owner operating the Kinondoni route.
“If we don’t increase fares, we run at a loss. But if we increase too much, passengers complain and we lose business.”
Long-haul trucker Elias Mrope, who moves cargo to Rwanda, puts it plainly: “The price of diesel determines whether I make a profit or go home empty. When fuel goes up, the whole chain suffers.”
Food prices follow closely. Tanzania’s agricultural sector relies on diesel-powered irrigation pumps, tractors, and cold storage.
Higher fuel costs make farming more expensive and reduce profit margins for smallholder farmers. At the same time, the cost of transporting maize, rice, vegetables, and meat from rural production areas to urban markets rises, contributing to food inflation in Dar es Salaam, Mwanza, and Arusha.
The manufacturing sector is also exposed. Factories depend on imported raw materials and petroleum-based inputs like plastics and lubricants.
When shipping routes are disrupted, lead times stretch from weeks to months. Production slows, inventories shrink, and manufacturers may cut shifts or delay expansion plans, affecting employment and export competitiveness.
Tanzania’s electricity generation is another vulnerable point. While the country has been expanding hydro and gas power, backup thermal plants run on imported diesel and heavy fuel oil.
A spike in fuel prices forces the Tanzania Electric Supply Company to either absorb the cost or pass it on through tariff adjustments, increasing the cost of doing business for industries and households.
The tourism sector, one of Tanzania’s top foreign exchange earners, is indirectly affected. Rising global fuel prices mean higher airfares for international travelers heading to Kilimanjaro, Serengeti, and Zanzibar.
If Middle East tensions deter long-haul travel or lead to airline route cancellations, tourist arrivals decline, reducing revenue for hotels, tour operators, and national parks.
The exchange rate adds another layer of strain. Tanzania’s shilling is already under pressure from a trade deficit and strong dollar demand for imports.
When oil prices rise, the Bank of Tanzania must allocate more foreign currency to fuel purchases, tightening dollar liquidity in the market. This can weaken the shilling further, making all imports more expensive and eroding purchasing power.
Government finances come under pressure too. Fuel subsidies, if maintained, strain the national budget and reduce fiscal space for infrastructure, health, and education spending.
If subsidies are removed, the burden shifts to consumers, often sparking public discontent and reducing disposable income.
Dar es Salaam Port, the gateway for much of East and Central Africa, faces its own challenges. Insurance premiums for vessels transiting through the Gulf rise during a Hormuz crisis, and some shipping lines may reroute cargo around the Cape of Good Hope.
That adds 10-14 days to delivery times and increases port handling costs, making Tanzania less competitive compared to regional ports like Mombasa or Durban.
Small and medium enterprises bear the brunt. Unlike large corporations, SMEs lack the capital buffer to absorb sudden cost increases.
A bakery in Kariakoo, a welding workshop in Morogoro, or a pharmacy in Dodoma all face higher input costs without the ability to hedge against currency or fuel volatility. Many are forced to reduce stock or lay off workers.
The fishing industry along the Tanzanian coast is affected as well. Artisanal fishermen rely on outboard motors powered by petrol.
When fuel prices spike, many are unable to afford trips beyond the near shore, reducing their catch and income while increasing pressure on near-shore fish stocks.
Inflation accelerates across the board. The National Bureau of Statistics has repeatedly shown that fuel and transport have a high weighting in Tanzania’s consumer price index.
A Hormuz disruption can push headline inflation above the Bank of Tanzania’s 5% target, complicating monetary policy and reducing real incomes.
Economists warn that the broader macroeconomic effects could be severe. “Tanzania’s import dependency on petroleum makes it highly exposed to external price shocks from the Gulf,” says Flora Willum, an economist based in Dar es Salaam.
“When global oil prices surge, the immediate transmission is through transport and food, which together account for over 50% of the household consumption basket.”
John Michael, a financial analyst, notes the fiscal trade-offs: “The government faces a difficult choice between subsidizing fuel and protecting its budget. If subsidies are sustained, we risk crowding out development spending. If they are removed, inflation will hit low-income households hardest.”
Foreign investment sentiment also shifts. Investors assessing Tanzania’s energy and logistics sector watch global supply chain stability closely.
Prolonged instability in the Gulf increases perceived risk for new projects, particularly in port development, energy infrastructure, and manufacturing zones along the Southern Agricultural Growth Corridor.
Remittances from Tanzanians working in the Gulf countries provide another channel of impact. Over 100,000 Tanzanians work in Saudi Arabia, the UAE, and Oman.
If a Hormuz crisis leads to economic slowdown or job losses in those countries, remittance flows back to families in Singida, Tabora, and Shinyanga could decline, affecting household consumption and school fees.
Tanzania’s debt servicing burden may worsen. Much of the country’s external debt is denominated in dollars.
A weaker shilling and higher import bill mean more shillings are required to service the same dollar debt, tightening the government’s fiscal position and limiting development spending.
The ripple effects reach the financial sector. Banks face higher default risks as businesses struggle with increased operating costs.
Loan performance in transport, trade, and agriculture portfolios deteriorates, reducing credit availability for small businesses that form the backbone of Tanzania’s economy.
In the long term, the Hormuz crisis reinforces Tanzania’s need to diversify energy sources and supply chains. Investments in renewable energy, regional oil storage capacity, and alternative shipping routes through the Indian Ocean become more urgent.
The Julius Nyerere Hydropower Project and ongoing natural gas developments offer some buffer, but transition takes time and capital.
For ordinary Tanzanians, the link between a narrow strait in the Middle East and the price of ugali at Kariakoo Market is rarely obvious. Yet the connection is real and direct.
When Hormuz is threatened, Tanzania suffers through higher fuel bills, costlier food, reduced investment, and tighter household budgets.
It is a reminder that in a globalized economy, no country is insulated from distant geopolitical shocks, and resilience depends on preparedness, diversification, and regional cooperation.
