Rwandans should start cutting non-essential spending and prepare for higher prices if Iran shuts the Strait of Hormuz, economists have warned. “Consumers must adjust their behaviour immediately,” economist Teddy Kaberuka said. “Reduce wants and focus on basic needs. If fuel prices rise, everything else rises. Households should prepare for that.” The warning comes as tensions involving Iran, the United States and Israel threaten one of the world’s most critical oil routes. The Strait of Hormuz carries nearly 20 per cent of global oil supplies. ALSO READ: How significant is Strait of Hormuz in US, Israel-Iran conflict Any closure would likely trigger a sharp increase in global oil prices, with import-dependent countries such as Rwanda feeling the impact quickly. Brent crude is already trading at about $85 a barrel, and analysts say it could climb to $100 if shipments are disrupted. Rwanda imports all of its petroleum products, meaning global price increases are passed directly to local pump prices. “If that route is closed, production costs in oil-dependent countries increase instantly,” Kaberuka said. “Importers pay more, raw materials become more expensive, supplies reduce, and the shock spreads across the global economy.” The Strait is especially important for Asia. China sends about 80 per cent of its oil imports through it, while India depends on it for roughly 75 per cent of its crude oil. ALSO READ: Suspension of RwandAir flights to Middle East continues Higher energy costs in these major economies would raise the price of manufactured goods, from machinery to processed foods. “When large economies face higher costs, smaller economies like Rwanda pay more for imports,” Kaberuka said. Fuel is a key input in Rwanda’s transport, agriculture, construction and manufacturing sectors. Any increase in fuel prices raises transport costs almost immediately, which traders and producers then pass on to consumers. “Rwanda will feel it quickly,” Kaberuka said. “If petrol prices increase, even someone transporting potatoes will raise prices.” Most of Rwanda’s imports pass through regional ports such as Mombasa before being transported by road. Higher diesel prices increase trucking costs, pushing up food and commodity prices in local markets. ALSO READ: Suspension of RwandAir flights to Middle East continues Jean Pierre Nkurunziza, Quality Control Manager at Mount Meru Soyco Limited, said businesses are already under pressure. “The destabilising effects are visible in raw materials like cooking oil, which we import from Malaysia,” he said. “Higher fuel prices increase our production and transport costs. Since most goods pass through Mombasa, any fuel increase affects us directly.” He added that supply-chain disruptions linked to tensions in the Gulf are delaying some industrial materials. “Some materials used to manufacture jerrycans come from the UAE, and we are seeing delays,” he said. Government outlines mitigation measures In an interview, Minister of Trade and Industry Prudence Sebahizi said the government has put measures in place to limit potential trade disruptions. “To ensure that Rwandans do not face shocks, we are working on two main strategies,” she said. “First, we are in discussions with petroleum importers to ensure that fuel that has already bypassed the conflict route—whether at ports or in transit—reaches Rwanda quickly. We also want to ensure we have sufficient fuel reserves.” “The second strategy is to diversify sources for goods that usually pass through that route,” she added. Investment slowdown fears Economist Straton Habyarimana warned that the tensions are already slowing global investment, a key driver of job creation and economic growth. “Investors are becoming cautious,” he said. “Many are thinking about where to put their money safely until the situation stabilises.” Some investors, he noted, are shifting funds into gold, whose price has risen by about two per cent, while others are buying US dollars as a safe store of value. “But when money moves into safe assets instead of productive sectors, investment slows,” Habyarimana said. “Investment creates jobs and supports economic stability.” He added that fears of a wider conflict are increasing uncertainty and affecting global policy decisions. “Some countries that were planning to reduce interest rates to stimulate spending are now holding back,” he said. “That slows economic activity and affects prices worldwide.” Economists say that while government mitigation measures are important, households must also act. “Diversification at the national level is necessary,” Kaberuka said. “But in the short term, citizens must adjust consumption behaviour because this strait is extremely critical for a country like Rwanda that depends heavily on imports.” If oil flows through the Strait of Hormuz are disrupted, Rwanda is likely to face higher fuel costs, rising food prices and tighter business margins. Economists say the most practical response is immediate: spend carefully, prioritise essentials and prepare for global price shocks.
