Himalayan kingdom Bhutan hikes fuel due to Mideast war

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THIMPHU: The Himalayan kingdom of Bhutan has announced a sharp increase in domestic fuel prices, citing the escalating war in the Middle East as a primary driver of global market volatility. The government stated on Wednesday that ‘external conditions beyond our control’ have forced the price adjustment, marking a significant challenge for the landlocked nation’s economy.

Although Bhutan is a carbon-negative country that generates substantial revenue from exporting hydroelectricity to India, it remains entirely dependent on imports for its fossil fuel needs. Since the conflict involving the United States, Israel, and Iran intensified in late February, petrol prices in the kingdom have surged by more than 60 per cent. Even with existing government subsidies, petrol at the pump has risen from approximately 65 Ngultrum in February to 95 Ngultrum as of April 1.

The price hike has led to long queues at filling stations in the capital, Thimphu, as residents brace for further supply disruptions. In response to the crisis, the Prime Minister’s Office has issued a set of energy-saving measures and directed public service agencies to reduce consumption. These measures include encouraging employees to walk to work, avoiding non-essential travel, and adopting remote working arrangements where possible.

The economic impact of the war is expected to ripple through Bhutan’s transportation, logistics, and construction sectors. Analysts warn that if global oil prices continue to climb, the kingdom's projected GDP growth for 2026 could be reduced by over one percentage point due to rising inflation and a potential slowdown in the tourism industry caused by international flight disruptions.