Fuel prices to drop further into 2026 as global supply softens

In Dar es Salaam, petrol prices dropped from Sh3,037 in April to Sh2,749 in December, with similar downward trends recorded in Tanga and Mtwara. Local industry players say forex movements have also played a pivotal role.

Speaking Secretary General of the Tanzania Petrol Stations Operators Association (TAPSOA), Tino Mmasi, said the recent slide in fuel prices has been driven partly by the weakening of the US dollar and the strengthening of the Tanzanian shilling during 2025.

“The decline in global oil prices has been supported to a great extent by the shilling gaining strength against the dollar,” he said.

“If you look closely at the period between October and November, the exchange rate stabilised, and oil prices also remained almost unchanged.

That stability helped cushion local pump prices.” Mmasi added that the outlook for 2026 will depend heavily on currency trends.

“As we move into 2026, we will be watching the direction of the dollar very closely.

So far, the trend has been favourable for Tanzania, and that has translated into significant relief at the pump,” he said.

The global picture now strongly favours a continuation of this downward trend.

Oil markets are 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 the negotiations to see whether sanctions on energy giants such as Rosneft and Lukoil could eventually be eased—moves that would “free up restricted oil” and add more supply to already softening markets.

Reuters quoted Goldman Sachs analysts saying that “oil markets and prediction markets do not appear to price a large probability of a near-term peace agreement and removal of the sanctions on Russian oil.”

Still, even the possibility of peace continues to exert downward pressure on speculative premiums. A similar assessment came from PVM Oil Associates, cited by Economies.com.

Analyst Tamas Varga noted that attention remains fixed on the talks, which “could eventually lead to Russia increasing its crude and product exports again, although that path is likely to be long.”

Even a slow normalisation would tilt global supply further into surplus.And beyond geopolitics, structural market dynamics appear to be turning decisively 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, defying widespread bearish sentiment, has consistently exceeded expectations,” JPMorgan’s Natasha Kaneva wrote.She added, “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, that 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 remains volatile but may join the downtrendDiesel has shown a more uneven pattern through the year.

In Dar es Salaam, prices fell from Sh2,936 in April to Sh2,704 by October, before edging back up to Sh2,779 in December as global gasoil inventories tightened.

The last-quarter uptick reflects stronger shipping demand, refinery maintenance cycles and higher seasonal consumption in Europe.

Even so, if the global supply expansion projected by JPMorgan and others materialises, diesel could also enter a more sustained decline in early 2026.

Meanwhile, 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 remained highly sensitive to import timing and domestic consumption cycles.