Sri Lanka fuel price volatility and supply shortages

Private fuel distribution companies in Sri Lanka have requested an upward revision of fuel prices, citing unsustainable financial pressures. Industry representatives reported that rising international prices and shipping costs have led to significant losses, with one official stating that private operators lose approximately Rs. 170 per litre of diesel sold.

While the Ceylon Petroleum Corporation (CPC) noted that costs have risen due to conflicts in West Asia, the government indicated it may consider allowing private operators to adjust prices based on landed costs. Energy Minister Anura Karunathilaka stated that an upward revision could impact the broader economy by increasing transportation and food prices. Following these pressures, the government announced its intention to absorb a portion of the rising global fuel costs to protect domestic consumers.

As of October 2026, the situation has escalated into renewed fuel shortages and queues as private distributors limit supplies to the domestic market. Energy Minister Anura Karunatilaka informed Parliament that companies including Lanka IOC, Sinopec, and RM Parks are reducing deliveries due to financial losses stemming from the government’s regulated pricing system and rising international costs. Specific supply reductions include Lanka IOC cutting auto diesel supply by 45% and Euro super diesel by 88% compared to February levels, while Sinopec has reduced diesel supply by 66%.

In response to these restrictions, the government has indicated it may seek legal advice under the Ceylon Petroleum Corporation (CPC) Act if private companies continue to limit distribution. While the CPC has increased its diesel and super diesel releases to compensate for the private sector shortfall, fuel transporters have urged the public to avoid panic buying, stating that issues are linked to pricing disputes and order delays rather than a total depletion of national stocks.