• Zimbabwe's fuel consumption in 2025 was approximately 2.1 billion litres, with diesel accounting for over 1.5 billion litres and petrol around 700 million litres
• This represents a significant increase from 1.6 billion litres in 2024, driven by the country's estimated 6.6% economic growth rate
• Zimbabwe's fuel import bill was US$1.69 billion in 2025; increasing ethanol blending and local production could slash this cost

Harare- Buy Zimbabwe, an advocate for promoting local production and reducing reliance on imports, says Zimbabwe should deepen its domestic fuel supply chains to shield the economy from global volatility. This call comes after recent fuel price hikes in the country, triggered by escalating geopolitical tensions in the Middle East that have disrupted key oil transit routes.

In a press release, the organization highlighted the need to leverage local resources like ethanol from sugarcane, lithium for electric vehicles, and solar energy to cut foreign currency outflows and foster job creation, especially as fuel imports topped US$1.7 billion in 2025.

The press release, issued amid surging global oil prices, emphasized strategic shifts in energy policy to domesticate the fuel supply chain.

Buy Zimbabwe's Advocacy and Communications Officer, Elvis Masvaure, pointed to the utilisation of bio-energy resources like ethanol to mitigate import dependencies while economist Malone Gwandu echoed this, urging long-term measures against reliance on imported commodities, including investments in lithium and solar for the automotive sector.

This advocacy aligns with Zimbabwe's 2025 fuel import bill of US$1.69 billion, which could be slashed through higher ethanol blending ratios and localised production.

Turning to the global stage, the latest oil developments paint a picture of heightened instability, with analysts warning of prices potentially soaring to unprecedented levels amid the U.S.-Iran conflict.

As of March 12, 2026, the war has led to a near-complete shutdown of commercial traffic through the Strait of Hormuz, disrupting about a fifth of global crude oil and natural gas supplies.

This chokepoint's closure has prompted emergency responses, including the International Energy Agency's release of 400 million barrels from strategic reserves to stabilize markets.

However, prolonged disruptions could push Brent crude prices above $100 per barrel (already happened early this week), with some scenarios deeming $150 or even $200 per barrel feasible if the conflict escalates further.

Goldman Sachs has flagged risks of prices exceeding $100 if shipping bottlenecks persist, drawing parallels to historical spikes like the 1974 oil crisis, where prices quadrupled in real terms.

Such elevations would not only strain global economies but also amplify inflationary pressures, potentially delaying interest rate cuts and hampering growth in import-dependent nations.

Oil price movements have been volatile in early March 2026, reflecting the conflict's immediacy. Brent crude, the international benchmark, surged from around $71 per barrel on February 27 to over $94 by March 9, driven by U.S. and Israeli strikes on Iran and retaliatory actions.

Intraday highs briefly touched $120 on March 9 before a sharp 7% drop as temporary de-escalation signals emerged, only to rebound to $100.43 by March 12, a 9.19% daily gain and a 48.24% monthly increase. West Texas Intermediate followed suit, climbing to $91 before settling lower.

Forecasts vary: J.P. Morgan anticipates a $60 average but acknowledges geopolitical premiums, while HSBC and the EIA project $79-80 for the year, revised upward from $58-65 due to sustained risks. OPEC+ plans modest output hikes of 206,000 barrels per day from April, but inventory builds may cap gains unless disruptions worsen.

Governments worldwide are responding. China has halted fuel export contracts, and marine insurance premiums have spiked 50% for Gulf vessels. These dynamics reflect the fragility of global energy security, with ripple effects on shipping, inflation, and economic stability.

Transitioning to Zimbabwe, these global upheavals compound an already precarious fuel sector, where imports dominate and prices are acutely sensitive to international fluctuations. With Brent hovering above $90 and potential spikes to $150, local pump prices, already elevated at US$1.71 for petrol (E5 blend) and US$1.77 for diesel as of early March 2026, face further escalation.

The Zimbabwe Energy Regulatory Authority (ZERA) announced increases effective March 4, 2026, with petrol rising 9.62% from US$1.56 and diesel 16.45% from US$1.52, attributing hikes to global volatility but cushioning via reduced charges to avoid even steeper prices of US$1.81 and US$1.90, respectively.

Consumption reached 2.1 billion litres in 2025, up 31% from 2024, with diesel comprising 1.5 billion litres, driven by mining, agriculture, and transport; projections for 2026 estimate 2.5 billion litres, inflating the import bill to US$1.86 billion.

This vulnerability echoes Buy Zimbabwe's warnings, as Strait disruptions directly threaten supply chains, potentially leading to shortages despite 2-3 months of stocks.

A deeper analysis of Zimbabwe's fuel industry reveals structural inefficiencies exacerbating external shocks. The mandatory ethanol blending policy, enforced since 2013, requires unleaded petrol to incorporate anhydrous ethanol at ratios up to 20% (E20), dropping to E5 or E10 during shortages.

This aims to substitute imports with sugarcane-derived biofuel, saving forex and promoting sustainability. Over a decade, 1 billion litres of ethanol have been blended, yielding excise duties, VAT on sugarcane, and corporate taxes while reducing emissions.

The government reaffirms commitment, aligning with climate goals and parliamentary oversight. Yet, production hovers at 80 million litres annually, constraining scalability. Critics highlight inflated costs. Local ethanol at US$1.10 per litre, double the global US$0.50-0.70 due to Green Fuel's and Triangle’s  duopoly, inflating pump prices and making Zimbabwe's fuel the priciest in Southern Africa.

This "subsidy" to private interests, via mandatory blending, burdens consumers, with calls for liberalisation to foster competition and peg prices to international benchmarks.

Taxes and levies further burden the sector, comprising nearly 30% of pump prices, excise duty (US$0.30/litre), carbon tax (US$0.03), ZINARA road levy (US$0.01-0.04), debt redemption levy (US$0.04), and others totalling US$0.52-0.54/litre.

Compared to Botswana (US$1.21/litre diesel) or South Africa, where taxes are 20-22%, Zimbabwe's regime appears punitive, often masking domestic fiscal demands under global volatility pretexts. Ethanol exemptions from certain duties offset some losses (US$0.30/litre replaced) via local taxation, but overall, these impositions exacerbate affordability, fuelling inflation as transport costs rise, evident in the 16% diesel hike's ripple effects on goods.

Opportunities for resilience lie in deepening local chains, as per Buy Zimbabwe. Elevating blending to 25-27% could save millions, but requires breaking monopolies and boosting output. Lithium reserves, attracting US$1.4 billion investments, and solar potential (over 2,000 kWh/m² annually) could pivot to EVs and renewables, targeting 2,100 MW by 2030. The 2026 budget proposes mining incentives and export taxes on unbeneficiated lithium (10%), signaling diversification.

To address these vulnerabilities, tangible solutions must target the core challenges, grid constraints that limit renewable integration, investment barriers hindering capital inflows, entrenched interests perpetuating inefficiencies (particularly in ethanol production), and the delicate balance of suspending levies without jeopardizing debt servicing and fiscal stability. These solutions draw from ongoing reforms, policy frameworks like the National Energy Compact, and expert recommendations, offering a practical pathway to resilience amid global oil volatility.

Grid constraints remain a foundational barrier, with aging infrastructure leading to transmission and distribution losses of 18-20%, contributing to significant economic costs estimated at 6.1% of GDP due to power shortages. Modernising the National Grid Code is a priority, and this includes adopting flexible operational standards, smart metering, and grid-forming capabilities to support up to 2,640 MW of renewables by 2030. Expanding transmission infrastructure is essential. Public-private partnerships (PPPs) offer a viable financing model. For rural areas, decentralized solutions such as mini-grids are key, under the Rural Energy Master Plan, deploying 56 community solar mini-grids with clear regulatory frameworks for licensing and technical standards can bypass grid limitations.

Investment barriers, including high upfront costs, regulatory uncertainty, and perceived risks, continue to deter capital despite Zimbabwe's abundant solar (over 2,000 kWh/m² annually) and lithium resources. Introducing competitive bidding for power projects represents a major shift from self-sourcing to transparent procurement, improving accountability and attracting independent power producers (IPPs).

Complementing this, liberalising electricity retail, allowing private firms to sell directly to consumers via ZERA-approved modalities, creates market opportunities and competition. Fiscal incentives are crucial, maintaining tax exemptions, duty waivers on solar and renewable equipment, and expanding net-metering thresholds (up to 5 MW) under the National Renewable Energy Policy de-risks projects.

Blended finance mechanisms, such as the Zimbabwe Green Fund and Results-Based Financing, alongside the SDG Renewable Energy Fund catalysing US$21 million for 100 MW, can mobilize domestic pensions, diaspora remittances, and international capital. The National Integrated Energy Resource Plan (NIERP), finalized in late 2025, ensures least-cost planning and policy consistency.

Entrenched interests, particularly the dominant position in ethanol production, perpetuate high costs and inefficiencies. While Green Fuel remains the primary producer with a capacity of around 120 million litres annually from its Chisumbanje operations, Triangle Limited (a subsidiary of Tongaat Hulett) contributes significantly from molasses as a sugar by-product, making ethanol production diversified rather than a strict monopoly.

However, perceptions of limited competition and higher local costs, around US$1.10 per litre versus global US$0.50-0.70 persist due to supply chain control and blending mandates. To foster efficiency, fully liberalize the sector by encouraging more producers through transparent licensing and removing barriers to entry for new entrants. Peg local ethanol pricing closer to international benchmarks to reduce blending costs by up to 50%, while scaling national output toward 200+ million litres annually via partnerships and incentives for sugarcane expansion.

Suspending levies like the carbon tax, currently around US$0.03 per litre, offers immediate consumer relief. The debt redemption levy approximately US$0.057 for petrol and US$0.013 for diesel and other components like strategic reserve levy, excise duty at US$0.30, ZINARA road levy total US$0.52–0.63 per litre, funding infrastructure, legacy energy debts, and reserves.

 A targeted, time-bound suspension of non-essential levies such as carbon tax for 6–12 months during peak volatility could lower pump prices without full revenue loss, offset by enhanced collections from mining royalties, lithium export taxes (10% on unprocessed ore), and strategic mineral purchases.

These integrated solutions, grid modernization through PPPs and code reforms, competitive procurement and incentives for investment, liberalisation and scaling in ethanol production, and prudent levy adjustments, align with the 2026 Budget, National Energy Compact, and Vision 2030. Implemented with political commitment and stakeholder coordination, they can significantly reduce import dependence, cushion against global shocks, and support sustainable economic growth.

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