THE Fijian Competition and Consumer Commission (FCCC) is monitoring the escalating crisis in the Middle East, where US and Israeli military strikes on Iran have triggered a crisis around the Strait of Hormuz in the conflict zone.
The strait is a strategically important choke point between the Persian Gulf and the Gulf of Oman and is within Iranian territory.
“About one-fifth of the world’s oil and gas travels through it every day, roughly 20 million barrels of oil, and a large portion of global gas shipments,” FCCC said in a statement.
“If it is blocked or disrupted, the world’s fuel supply gets choked. The strait has not been officially closed, but things are tense.”
FCCC chief executive officer Senikavika Jiuta said FCCC was currently monitoring the situation and would provide updates on the potential economic impacts, so Fijians are better prepared.
“With Fiji being a price taker, it is inevitable that there will be an impact, especially on fuel prices,” she said.
“Our team is diligently monitoring the current events and will provide further analyses highlighting the impact, including on other sectors, as the situation continues to develop.
“Fiji imports all of its fuel, making about 16 per cent of Fiji’s total imports, as we do not produce any crude oil of our own. “That means when global oil prices go up, Fiji’s fuel prices follow, usually within a month since we use a one-month pricing lag for our fuel and LPG price determinations.
“Higher oil prices will not just hit the pump prices, they have the potential to raise costs across the entire economy, so we ask everyone to please take note and prepare accordingly.”
Potential sectoral impacts include:
n Transport & logistics — moving goods around Fiji costs more, so shop prices go up.
n Food & groceries — imported food and locally transported produce both get pricier.
n Electricity — diesel-powered generation becomes more expensive.
n Tourism — higher aviation fuel costs can reduce visitor numbers and squeeze business margins.
n Households — lower-income families are hit hardest, since they spend a larger share of their income on transport, cooking gas, and basic goods.
