Oil volatility puts Fiji at risk

Fiji and other Pacific Island countries face growing economic pressure as rising global oil prices and supply chain disruptions threaten fuel costs and stability across the region.

Experts warn the ongoing Middle East conflict could significantly impact fuel prices, with Pacific nations remaining highly vulnerable due to their reliance on imported petroleum.

A 2009 Asian Development Bank study ranked seven Pacific Island countries, including Fiji, among the top 10 most vulnerable on the Oil Price Vulnerability Index.

Fiji National University College of Engineering and Technical and Vocational Education and Training dean Professor Atul Kumar Raturi said the region’s dependence on imported fuel leaves it exposed.

Fiji National University’s College of Engineering and Technical and Vocational Education and Training (CETVET) Dean, Professor Atul Kumar Raturi.

Photo: FNU

“Since all petroleum products are imported in the Pacific, any rise in fuel prices will affect PICs adversely, impacting every energy process from electricity generation to transport, and ultimately increasing the cost of goods,” Professor Raturi said.

He said the situation had worsened due to global supply disruptions, including the partial closure of the Strait of Hormuz, a key route for nearly 30 per cent of the world’s oil trade.

“The conflict has reduced global supply by approximately 7 to 8 million barrels per day. On 18 March, one of the largest gas fields shared by Iran and Qatar was attacked, pushing oil prices up to around USD 110 per barrel. This has triggered supply chain disruptions across Asia and Europe,” he said.

Professor Raturi warned the impact may not be immediate.

“The effects will be felt in the coming days. Existing fuel shipments may temporarily cushion price increases, but future imports are likely to reflect higher global prices,” he said.

He also pointed to revised forecasts by Standard Chartered Bank, with Brent crude expected to average USD 85.50 per barrel in 2026, up from USD 70, and USD 77.50 in 2027, up from USD 67.

Amid the uncertainty, he urged both Government and the public to act.

“Citizens can support Government efforts by being mindful of energy consumption. Using public transport, carpooling, reducing air conditioning usage, walking or cycling short distances, and adopting energy-efficient cooking methods such as induction stoves can help conserve limited fuel supplies,” he said.

Professor Raturi stressed the need for a long-term shift away from fossil fuels.

“To reduce dependence on imported petroleum, we must electrify key energy sectors including transport and manufacturing. This transition must be supported by renewable energy sources such as hydropower, solar, biomass and others,” he said.

He said solar investment offered strong benefits.

“Each megawatt of solar installed in areas such as Nadi can reduce diesel consumption by over 300,000 litres annually. Despite initial capital costs, solar photovoltaic systems offer strong economic returns and enhance energy security,” he said.

While Fiji has made progress, he noted challenges remain.

“While Fiji has substantial hydropower resources, approximately 40 per cent of electricity is still generated using diesel and heavy fuel oil. This must be significantly reduced in line with Fiji’s Nationally Determined Contributions and Low Emissions Development Strategy,” he said.

He added that renewable options such as biomass, geothermal and wind should also be explored.

“Access to reliable and clean energy is essential to achieving broader sustainable development goals, including improvements in health, water, education and climate resilience. Strengthening renewable energy development alongside electrification is critical to avoiding future shocks and ensuring long-term sustainability,” Professor Raturi said.