A deepening geopolitical crisis in the Middle East has sent shockwaves through Uganda’s economy, disrupting critical agricultural supply chains, inflating fuel costs, and denting export revenues for the East African nation.
According to data from the World Integrated Trade Solution (WITS), Uganda’s agricultural sector, the backbone of its economy, relies heavily on the Gulf region, which supplies nearly 40% of the country’s annual $54.75 million fertiliser imports. A strict blockade of the strategic Strait of Hormuz has choked off a maritime corridor responsible for roughly 30% of global seaborne fertiliser and essential raw materials like urea and sulfur. Coupled with severe damage to key energy hubs in the Gulf, the logistics logjam has sent fertiliser prices soaring, threatening to derail Uganda’s ongoing initiative to accelerate the adoption of inorganic fertilisers among domestic farmers.
The shipping turmoil has simultaneously destabilized global energy markets. Brent crude prices surged over 40%, climbing from $72 to more than $106 per barrel. The shock has translated directly into Uganda’s domestic retail market, where industry data shows petrol jumped from UGX 5,130 to UGX 6,000 per liter between February and May 2026, while diesel spiked from UGX 4,739 to UGX 5,900 per liter. The diesel spike is particularly damaging to the agrarian economy, as the fuel powers tractors, irrigation systems, milling operations, processing plants, and the transport network connecting rural farms to urban markets. The reliance on Middle Eastern energy is vast; WITS data notes that Uganda imported approximately $1.634 billion in fuel from the UAE, Saudi Arabia, Oman, and Kuwait alone, leaving it highly exposed to external geopolitical friction.
The dual pressure of high input costs and broken trade routes is already showing up in macroeconomic indicators. A report from the Ministry of Finance revealed that Uganda’s total export earnings fell 5.5% in a single month, dropping from $1.454 billion in January 2026 to $1.374 billion in February. Bank of Uganda data pointed to a sharp contraction in trade with the United Arab Emirates specifically, where exports fell from $703.5 million to $644.9 million over the same period. The drop-off was driven primarily by reduced receipts from gold, beans, fish products, and oil re-exports.
To insulate the economy from future external shocks, economists and industry experts are urging Kampala to fast-track domestic alternatives. Recommendations include reviving and expanding local fertilizer manufacturing facilities, specifically the Sukulu Phosphate Fertilizer Factory within the Osukuru Industrial Complex and the former Tororo Industrial Chemicals and Fertilizers (TICAF) plant.
On the energy front, policy analysts advise the government to expand its strategic petroleum reserves from the current 22-to-30-day supply to a more robust 90-to-120-day buffer. Furthermore, the state is being pressured to diversify its refined oil imports away from exclusive Middle Eastern reliance, accelerate domestic oil production, and advance its long-delayed refinery development. To sustain market competitiveness, additional calls have been made for targeted government support for agro-processing, trade destination diversification, and expanded access to affordable corporate finance and logistics infrastructure.
