Global oil prices have surged back above USD 100 per barrel, raising fresh concerns over the Maldives’ exposure to the escalating Middle East conflict, even as Government subsidies continue to shield the public from much of the immediate impact.
Brent crude surged above USD 104 per barrel on Friday after gaining more than 8 percent during the week, with prices approaching USD 110 at one point as attacks on tankers, energy infrastructure and critical shipping routes intensified.
The situation surrounding the Strait of Hormuz has become particularly serious. Ship-tracking data showed vessel movements through the strait falling dramatically compared with levels before the Iran war, while instability has also spread to the Red Sea and Bab el-Mandeb shipping route.
The International Energy Agency has now warned that global oil supply could decline by 5.7 million barrels per day in 2026 as disruption to Gulf production and transportation continues.
For the Maldives, a prolonged period of oil above USD 100 could have consequences extending far beyond the petrol pump.
Maldives fuel bill has already more than doubled
The financial impact of the Middle East conflict on Maldivian fuel imports was already substantial before the latest surge in crude prices.
Figures disclosed by the Ministry of Climate Change, Environment and Energy in May showed that the Maldives had been spending around USD 50 million per month on fuel imports before the conflict.
Following the escalation, monthly expenditure increased to approximately USD 116 million, according to the Ministry.
That represents more than double the previous monthly expenditure and demonstrates how quickly an international energy shock can translate into additional foreign-currency requirements for the Maldives.
Government figures also showed that approximately USD 647 million was spent on fuel imports in 2025, equivalent to around 10 percent of GDP.
The Maldives has no proven domestic fossil-fuel reserves and remains almost entirely dependent on imported energy.
Public largely protected by Government subsidies
Despite the enormous increase in the country’s fuel bill, Maldivians have not experienced an equivalent increase in domestic fuel and utility prices.
This is largely because the Government has continued subsidising fuel and maintaining essential services without passing the full increase in international costs directly to consumers.
Government officials said in May that the Administration’s priority was to prevent rising fuel-import costs from increasing the prices of public services and utilities.
This means the global oil shock is already costing the Maldives significantly more, but much of that burden is being absorbed by the state rather than appearing immediately in household expenses.
The World Bank has similarly noted that continued subsidies across a wide range of goods have helped contain inflationary pressures in the Maldives, while simultaneously increasing fiscal costs.
The protection therefore comes at a price.
When international fuel prices increase but domestic prices remain subsidised, the additional cost does not disappear. It can instead appear through increased Government expenditure, higher subsidy requirements and additional financial pressure on state-owned utilities.
As long as the Government maintains these protections, households may continue to be insulated from much of the immediate shock. But sustaining them becomes increasingly expensive if oil remains above USD 100 for months.
Maldives burns 8,000 barrels of diesel every day for electricity
Electricity generation is one of the biggest reasons the Maldives is so vulnerable to international oil prices.
Government figures show that around 8,000 barrels of diesel are consumed every day to generate electricity across inhabited islands, equivalent to approximately 2.9 million barrels annually.
The Asian Development Bank has said imported fuel generates around 94 percent of electricity in the Maldives.
Fuel is also critical for desalination plants supplying drinking water, inter-island transportation, food and healthcare logistics and waste-management operations.
This means an energy shock can potentially affect essential services throughout the country.
The scale of the vulnerability has already prompted international financial assistance. The Asian Development Bank approved a USD 50 million emergency loan in August to support Maldivian fuel imports, complementing USD 40 million in support approved earlier by the World Bank.
Together, the two institutions committed USD 90 million towards helping the Maldives maintain critical fuel supplies and essential services during the crisis.
Higher oil prices mean greater demand for dollars
The foreign-exchange implications are equally important.
The Maldives purchases fuel internationally using foreign currency. When the international price rises sharply, significantly more dollars are required to purchase similar quantities of fuel.
A monthly fuel bill increasing from around USD 50 million to USD 116 million therefore represents not only higher energy expenditure, but also substantially greater demand for foreign currency.
If global oil prices remain above USD 100, this pressure could persist.
The World Bank already expects the Maldives’ current-account deficit to widen from an estimated 7.5 percent of GDP in 2025 to 20.6 percent of GDP in 2026, partly because of reduced tourism receipts and higher import costs caused by the Middle East conflict.
Foreign-exchange liquidity also remains constrained.
Official reserves increased to USD 1.3 billion in March before falling to USD 717.9 million in April following major external repayments, according to the World Bank.
High external financing requirements, debt-service obligations and import demand are expected to continue placing pressure on the country’s balance of payments and reserves.
Tourism faces risks from both sides
Tourism represents another major channel through which expensive oil can affect the Maldives.
Almost every international visitor arrives by air.
Aviation fuel represents a significant operating expense for airlines, particularly on long-haul routes. Sustained increases in jet-fuel prices can therefore raise airline costs and eventually contribute to higher ticket prices.
More expensive airfares could make travelling to the Maldives more costly, particularly for visitors travelling from distant European and Asian markets.
The tourism industry has already demonstrated its vulnerability to the Middle East conflict.
According to the World Bank, tourist arrivals increased strongly during January and February 2026 before falling 20.7 percent year-on-year in March and 24.4 percent in April as Middle East airspace closures and flight cancellations disrupted international travel.
The World Bank has identified tourism disruption, higher fuel prices and tighter financing conditions as major factors affecting the Maldives’ economic outlook.
Resorts also face higher operating costs
The pressure does not end when tourists arrive.
Resorts rely on energy for electricity generation, air conditioning, desalination, transportation and everyday operations.
Food, beverages, construction materials and other supplies must also be imported and transported to individual resort islands.
Higher fuel prices can therefore increase the cost of aviation, shipping, domestic transportation and resort operations simultaneously.
This creates a double exposure for the tourism industry: tourists may face more expensive flights to reach the Maldives while resorts face higher costs to accommodate them.
If the global energy shock persists, businesses may eventually have to absorb those additional costs or pass some of them to customers.
Shipping and imported goods could become more expensive
The Maldives’ dependence on imports extends well beyond energy.
Food, medicine, construction materials and most consumer products have to be transported into the country before being distributed across the islands.
Higher oil prices can increase international shipping and freight costs, while expensive diesel can also increase the cost of domestic maritime transportation.
This creates another potential route through which the global energy shock could eventually reach consumers.
Even if domestic fuel prices remain subsidised, businesses exposed to international freight, aviation or other unsubsidised costs may face increased expenses.
Inflation remains a concern
Inflation in the Maldives had already accelerated before the latest oil-price surge.
According to the World Bank, average consumer inflation increased from 1.4 percent in 2024 to 4.0 percent in 2025.
Inflation is projected to rise further to 6.0 percent in 2026.
Government subsidies have helped prevent even stronger price increases, but the World Bank warns that prolonged conflict in the Middle East could further increase the cost of essential imports, particularly fuel, food and medicine.
Food prices are especially important for household welfare.
World Bank estimates suggest that a 10 percent increase in food prices could raise the Maldives’ poverty rate by 1.6 percentage points and increase vulnerability to poverty by 2.1 percentage points.
Government absorbing the shock does not make it free
The fact that motorists and households are not currently experiencing the full international fuel-price increase can create the impression that the Maldives has escaped the global energy shock.
Economically, however, the country is already paying for it.
The difference is who pays.
When fuel prices are subsidised, consumers are protected at the point of purchase, but the Government must finance the difference. When state-owned utilities absorb higher generation costs, those costs can affect their finances or ultimately require additional Government support.
Meanwhile, the foreign currency required to purchase the fuel must still leave the country.
The Maldives can therefore experience a severe oil shock through Government finances and foreign-exchange demand even when domestic petrol, diesel and electricity prices remain relatively stable.
Global supply risks are growing
The latest developments in the Middle East have increased uncertainty over how quickly oil markets can return to normal.
The International Energy Agency expects global oil supply to fall by 5.7 million barrels per day in 2026, approximately 6 percent, amid continuing disruptions.
Saudi oil infrastructure and Red Sea shipping routes have also come under increasing pressure.
At the Strait of Hormuz, one of the world’s most important energy corridors, ship movements have fallen dramatically. Reuters reported that only seven vessels transited the strait on September 10, compared with a pre-war daily average of around 125.
Such disruptions can affect not only the availability of crude oil but also shipping costs, insurance premiums and refined-fuel prices.
Why USD 100 oil matters for Maldives
A temporary spike above USD 100 does not automatically mean Maldivian households will immediately face higher petrol, electricity or food prices.
Existing fuel stocks, procurement arrangements, Government subsidies and controlled domestic prices can delay or absorb some of the impact.
The critical factor is how long international prices remain elevated.
If crude oil stays above USD 100 for an extended period, fuel inventories will have to be replenished at higher international prices, airlines will continue purchasing expensive aviation fuel and shipping companies will face elevated energy and insurance costs.
For the Maldives, that can translate into greater demand for dollars, higher Government subsidy expenditure, increased pressure on state-owned utilities, more expensive imports and additional costs for tourism businesses.
The country was already spending around USD 116 million per month on fuel following the Middle East conflict, compared with approximately USD 50 million before it.
The public may currently be protected from much of the immediate impact by Government subsidies, but that does not mean the economic cost has disappeared.
Instead, a substantial part of the burden has shifted to the state.
With international oil prices once again above USD 100 and disruption continuing across some of the world’s most important energy and shipping routes, the duration of the current oil shock could become increasingly important for the Maldives’ economy, foreign-exchange position and public finances.
