Tanzanians may start 2026 with a welcome drop in fuel prices, as global oil markets show signs of softening. This trend is expected to continue, driven by a combination of factors. The Energy and Water Utilities Regulatory Authority (Ewura) reports a steady decline in petrol prices since April, influenced by cooling global benchmarks, improved supply conditions, and reduced geopolitical risk premiums. In Dar es Salaam, petrol prices have dropped from Sh3,037 in April to Sh2,749 in December, mirroring similar trends in Tanga and Mtwara. Local industry experts attribute this to forex movements, particularly the weakening of the US dollar and the strengthening of the Tanzanian shilling in 2025. Speaking Secretary General of the Tanzania Petrol Stations Operators Association (TAPSOA), Tino Mmasi, highlights the role of currency fluctuations, noting that the shilling's strength against the dollar has significantly contributed to the decline in global oil prices. This stability has helped stabilize local pump prices. However, the outlook for 2026 remains dependent on currency trends, with Mmasi emphasizing the need to closely monitor the dollar's direction. The global oil market is closely watching renewed Russia-Ukraine peace efforts, which could reshape sanctions and potentially unlock new volumes of Russian crude. CNBC reports that traders are awaiting the outcome of negotiations to see if sanctions on energy giants like Rosneft and Lukoil can be eased, freeing up restricted oil and adding supply to already softening markets. Despite the possibility of a near-term peace agreement being priced out by oil markets and prediction markets, the potential for peace continues to exert downward pressure on speculative premiums. PVM Oil Associates, cited by Economies.com, shares a similar assessment. Analyst Tamas Varga notes that attention remains fixed on the talks, which could lead to Russia increasing its crude and product exports again, although this path is likely to be long. Even a slow normalization would tilt global supply further into surplus. Beyond geopolitics, structural market dynamics appear to be turning bearish. Business Insider reports that JPMorgan analysts expect an expanding supply-demand imbalance in the coming years, projecting that oil supply will grow at three times the rate of demand in both 2025 and 2026. Demand has consistently exceeded expectations, yet supply has outpaced these gains by more than twofold, with the bulk of growth coming from the Americas. For import-dependent markets like Tanzania, this trend is likely to translate into continued downward pressure on pump prices, particularly for petrol, which has been more responsive to global price movements than diesel. Diesel prices have shown a more uneven pattern, falling from Sh2,936 in April to Sh2,704 by October in Dar es Salaam, before edging back up to Sh2,779 in December due to tightening global gasoil inventories. The last-quarter uptick reflects stronger shipping demand, refinery maintenance cycles, and higher seasonal consumption in Europe. However, if the global supply expansion projected by JPMorgan and others materializes, diesel could also enter a more sustained decline in early 2026. Kerosene, heavily used in rural and peri-urban households, has been the most volatile product, with sharp mid-year fluctuations. Prices in Dar es Salaam dropped from Sh3,053 in April to Sh2,653 in December but remain highly sensitive to import timing and domestic consumption cycles.
