The war in Iran and the closure of the Strait of Hormuz have plunged global energy markets into deep uncertainty, disrupting critical oil and gas flows and accelerating structural shifts in how governments and industry approach energy policy, trade, and security.
The war is exposing the world’s reliance on fragile fossil fuel routes, lending urgency to calls for hastening the shift to renewable energy.
Fighting has all but halted oil exports through the Strait of Hormuz, the narrow waterway that carries about a fifth of the world’s oil and liquefied natural gas, or LNG. The disruption has jolted energy markets, pushing up prices and straining import-dependent economies.
RELATED POSTS
Asia, where most of the oil was headed, has been hit hardest, but the disruptions also are a strain for Europe, where policymakers are looking for ways to cut energy demand, and for Africa, which is bracing for rising fuel costs and inflation.
Unlike during previous oil shocks, renewable power is now competitive with fossil fuels in many places. More than 90 percent of new renewable power projects worldwide in 2024 were cheaper than fossil-fuel alternatives, data from the International Renewable Energy Agency shows.
Nonetheless, the global oil supply shock has already had measurable effects, including in Ethiopia.
Among them is an eyewatering surge in the price of electric vehicles (EVs). Prices for some EV models have climbed by up to one million Birr over the past few weeks, setting EV importers and dealers up for a windfall as the fuel crisis pushes consumers towards alternatives.
The BYD Seagull now goes for 3.9 million Birr, while other BYD models like the Song Plus, Song L-662, and Yuan Plus retail for upwards of 5.5 million, 7.5 million and 4.7 million Birr, respectively. Each has seen prices climb by at least half a million Birr since February.
“Demand for EVs has dramatically increased. We’re running out of stock and have ordered a new shipment from China,” said one car salesman in Addis Ababa. “The main factor driving the hike in price is the fluctuation of the USD-to-Birr exchange rate.
He notes that price hikes have not been limited to EVs. Traditional internal combustion vehicles have also become more expensive in recent weeks. The Suzuki Dzire, a model that has become ubiquitous on Addis Ababa’s streets in recent years, has reportedly seen prices surge by almost a third to 4.3 million Birr.
What’s more, used EVs are commanding higher price tags, which is atypical for EV markets elsewhere in the world, and locally assembled EVs have also been caught up in the trend.
Suleiman Mussa, owner of Haqiqa Global Business, an EV importer, said that demand for electric minibuses and buses is growing among government institutions, which previously relied on diesel-powered vehicles.
“Although we import electric automobiles, the ever-growing demand after the Iran-Israel-US war is for electric buses and minibuses,” said Suleiman.
He noted that his company has ordered 25 buses and 45 minibuses from China based on requests from government institutions. In today’s market, the price of an electric minibus ranges from 4.5 to 6.5 million Birr.
Suleiman, whose company imports BYD, Geely Motors, Zioma, Toyota, and Changan EV models, attributed the recent price hikes to soaring shipping costs. He explains that transporting a single EV from a port in China to Djibouti can consume USD 5,500, up from USD 3,000.
“The only increase is in shipping costs, not the price of the vehicles in China,” he said.
Suleiman foresees that demand for EVs can only grow if the conflict and supply chain disruptions in the Middle East continue. He believes the only stumbling block to the swift adoption of EVs has been the low awareness level among buyers regarding the durability and performance of EVs and their batteries—a challenge that’s now steadily being resolved.
“Customers have now grown comfortable with the recent price increases,” he said.
Mesele Nigussie, a resident of Addis Ababa, recently shared his experience with the rising prices of electric vehicles in Ethiopia. He purchased a Jac E30 model EV just a month ago for 3.6 million Birr, a sharp increase from its previous price of 2.96 million Birr.
The vehicle, capable of traveling 300 kilometers per charge, had initially attracted him for its efficiency and environmental benefits. However, the sudden price hike left him stunned.
There is a growing concern among Ethiopian EV drivers who are eager to embrace sustainable transport but are now facing unexpected financial hurdles.
Another driver, Hirut Alemu, who owns a different EV model, echoed similar frustrations. She explained that when she bought her car last year, the price was manageable compared to traditional fuel vehicles. But now, with the recent increments, she worries that electric mobility may become a luxury rather than an accessible alternative.
“I chose an EV because I believed it was the future—clean, efficient, and affordable in the long run. But with these new prices, many will hesitate to make the switch,” Hirut noted.
While Ethiopia is pushing toward greener transport solutions, the rising costs risk slowing adoption. Without clear explanations for the price hikes or supportive policies to stabilize costs, the dream of widespread electric mobility may remain out of reach for many.
Eshetu Mekonnen, CEO of Universal Engineering Manufacturing and Training, a firm specializing in retrofitting EVs, asserts that renewable energy is the only sustainable path forward. With over three decades of experience at Mercedes-Benz—a globally renowned automobile brand—Eshetu believes that within a year, it is entirely possible to convert all internal combustion engines (ICEs) into electric ones through retrofitting.
However, he cautions that for this vision to become a reality, government cooperation and collaboration with banks are crucial.
“If that’s done, all things are possible,” he said.
Eshetu notes that while the retrofitting effort would require substantial staffing, the matter ultimately rests in the hands of the government, as private companies would not undertake it alone.
He urges the government to allocate a budget for retrofitting old diesel vehicles, and points to incentives in countries like Germany, which subsidizes EV purchases for young people.
“If the project is well-planned and likely to happen, working around the clock like any other series endeavor, we Ethiopians are fully capable. There’s no need to bring expertise from China or other countries,” he stressed. “The transition from diesel to EVs is very simple—I know exactly how we would work. We only need some electrical materials to build the first prototype; the rest we will accomplish ourselves.”
Nevertheless, he emphasized that government support remains crucial.
“That requires immediate action—not speculation about when the Middle East war will end,” said Eshetu.
Even if the war were to end at once, its effects on fuel supply will likely haunt the global market for a considerable amount of time.
Kuwait’s primary oil refinery, for example, will take at least four years to recover from damage sustained from an Iranian missile strike. The same holds true for refineries in Iran, Saudi Arabia, and elsewhere.
“Within this timeframe, countries like Ethiopia will be forced to buy oil at inflated prices or simply grind to a halt,” Eshetu warned. “The viable options now are importing EVs or embarking on a massive retrofitting campaign—this crisis presents a unique opportunity.”
On infrastructure development, he observed that this year is better than the last, and next year promises further improvement. “
Ethiopian Electric Power is expanding charging infrastructure for EVs, Ethio telecom is following suit, and private importers are moving in the same direction,” Eshetu said.
“Hence, Ethiopia is far ahead of other African nations in EV adoption. Converting buses to electric is feasible given their relatively small numbers; what’s required is the government’s commitment,” he explained. The fundamental benefit of this initiative, he noted, is the knowledge transfer to Ethiopians, adding that even most European countries are now well aware of the advantages of EVs.
Bereket Tesfaye, a chemical engineer and certified circular economy specialist, observes that the Gulf energy crisis highlights a critical opportunity. Ethiopia is uniquely positioned to transition toward a more resilient energy system, as the country already generates over 90 percent of its electricity from renewables—particularly hydropower—providing a solid foundation for transport electrification.
Ethiopia is already emerging as a leader in electric mobility in Africa. As of early 2026, there are over 115,000 electric vehicles on the road—up from about 7,000 in 2022, according to data from the Ministry of Transport and Logistics.
Notably, more than 60 percent of new vehicle registrations in 2024–2025 were electric, supported by strong policy measures, including restrictions on internal combustion engine vehicle imports and tax incentives. The government aims to reach 500,000 EVs by 2030, with at least nine companies currently engaged in local assembly.
Compared to countries such as Kenya, Rwanda, and South Africa, Ethiopia stands out due to its clean electricity mix and ambitious policy direction.
“However, the lesson from the current crisis is clear: the transitions must be diversified, not linear,” said Bereket, who is also an energy and waste management consultant at Circular Nexus Consulting, asserts.
A realistic pathway for Ethiopia, he suggests, is a mixed and integrated energy strategy comprising electric mobility for light-duty vehicles such as private cars, taxis, and urban fleets; continued petroleum use during the transition phase; and natural gas along with alternative fuels for heavy-duty transport where electrification remains constrained. At the same time, he urges Ethiopia to urgently strengthen its energy security systems by establishing strategic fuel reserves to buffer against shocks, diversifying suppliers beyond the Gulf region, securing alternative logistics corridors including expanding access to ports in Djibouti, the Red Sea, and potentially Somalia, and strengthening diplomatic engagement to safeguard energy supply routes.
The current geopolitical tensions—particularly the disruption of the Strait of Hormuz—have laid bare the structural vulnerability of global oil supply chains.
“For Ethiopia, this’s not an abstract global issue but an immediate national crisis,” Bereket said. As of early April 2026, the situation has become acute. Three vessels carrying critical fuel supplies for Ethiopia are currently stranded in the Arabian Gulf, unable to transit through the Strait of Hormuz due to escalating conflict involving Iran, Israel, and the US.
These ships carry approximately 180,000 metric tons of refined petroleum products—including 120,000 metric tons of diesel and 60,000 metric tons of jet fuel, equivalent to roughly 1.3 to 1.4 million barrels.
“The implications are severe. These shipments, primarily sourced from Kuwait, represent about 60 percent of Ethiopia’s diesel imports and 100 percent of its jet fuel supply for the period,” he explained.
Their disruption has effectively created a major supply shock. The blockade, which began in late February or early March 2026 and intensified into early April, has reduced vessel traffic through the Strait from over 130 ships per day to fewer than ten in some cases. Shipping companies have halted operations, and insurers have withdrawn coverage due to war risks.
“For example, which channels over 90 percent of its trade through Djibouti, the impact is immediate and cascading: fuel shortages, particularly diesel and aviation fuel; sharp price increases forcing procurement from the spot market at USD 86 to 92 or more per barrel; a growing fuel subsidy burden now exceeding 272 billion Birr; and wider supply chain disruptions affecting transport, food distribution, and inflation,” said Bereket.
The crisis is unfolding against a backdrop of already high dependence.
In the 2023/24 fiscal year, Ethiopia imported approximately 3.8 million metric tons of petroleum products with a total value of about 197.5 billion Birr, with broader estimates ranging from USD 2.8 to 5.6 billion annually. Fuel imports account for 10 to 15 percent of the total merchandise imports, while demand has been growing at around 10 percent per year.
Diesel alone represents over 60 percent total consumption.
“This level of dependence, combined with the concentration of supply from the Gulf—including key partners such as Kuwait, Bahrain, and Sudan—makes Ethiopia highly exposed not only to price volatility but also to geopolitical disruptions,” said Bereket.
Ethiopia’s diplomatic alignments, including engagement with partners such as the United Arab Emirates, further underscore that energy security is deeply intertwined with foreign policy.
Looking ahead, Bereket further suggests that domestic capacity building will be essential, including exploring local refining capacity and potential domestic oil and gas development, investing in battery manufacturing and EV value chains, and expanding charging infrastructure while strengthening grid reliability.
For him electric mobility, while requiring upfront investment, offers long-term cost stability, reduced foreign exchange pressure, and improved economic resilience.
“The current disruption is not simply a crisis—it’s a strategic inflection point,” he says. “Ethiopia is not too late, but it must act with urgency and clarity.”
As Bereket puts it, the way forward lies in a balanced, data-driven, and forward-looking energy strategy—one that combines electrification, diversified fuel use, domestic industrial development, and proactive diplomacy to secure long-term energy security and economic stability.
