The global oil shock triggered by conflict in the Middle East is sending tremors across energy-importing economies. For Myanmar, already weakened by years of economic collapse since the 2021 coup, the impact could be severe.
Unlike other countries, Myanmar enters this crisis with little room to manoeuvre.
Fuel reserves appear dangerously limited. While the junta claims supplies will last 50 days, existing regulations require private fuel companies to hold just 34 days of stock. Conditions on the ground suggest even that threshold may not be met. Diesel shortages are already emerging, threatening transport networks and agricultural production.
At the same time, reports that around 65 percent of aviation fuel stocks held by National Energy Puma Aviation Services, the major importer and distributor of aviation fuel in Myanmar, have been seized by the military—disrupting domestic flights—highlight a familiar pattern: in times of scarcity, resources are redirected towards regime priorities.
The pressure is compounded by a fragile currency. Myanmar imports more than 90 percent of its fuel, largely from regional suppliers, making the kyat highly exposed to global price shocks.
Temporary exchange rate stability in 2025 came at a cost—tight import controls that restricted access to essential goods, including medicines and industrial inputs. That fragile balance is now unravelling.
Within the final week of last month, the kyat has depreciated by nearly 10 percent against the US dollar, underscoring how quickly external shocks can destabilise the economy. The true level of foreign reserves remains unclear, raising further doubts about how long authorities can continue supplying foreign currency to fuel importers.
Fuel prices are climbing fast. Prices have risen by more than 50 percent compared to February levels, with a sharp increase of over 20 percent in recent days alone. In Myanmar, such increases quickly ripple through the economy, pushing up transport costs, market prices and basic goods.
For ordinary people, this means shrinking purchasing power. For farmers, it means higher input costs at a critical stage of the harvest season.
Yet the junta has limited capacity to respond.
Public debt is estimated at above 60 percent of GDP, with a fiscal deficit of around 4.9 percent. This leaves little room for subsidies or relief measures, such as supporting farmers with diesel. With limited borrowing options, deficits are often financed by money creation—adding further pressure on inflation.
Unlike neighbouring countries, Myanmar cannot access emergency financing from institutions such as the Asian Development Bank due to its lack of international recognition, cutting off a critical source of crisis support.
Governance further complicates the picture. Past crises have shown that the military prioritises control over public welfare, from the seizure of oxygen supplies during the Covid-19 pandemic to recent reports of fuel appropriation.
Myanmar is already facing a severe humanitarian emergency, with 3.6 million internally displaced people and 22 million in need of assistance, including 12.4 million facing food insecurity. The oil shock risks pushing these numbers even higher.
In most countries, an energy crisis tests resilience. In Myanmar, it compounds collapse.
Without sufficient reserves, fiscal capacity, or international support, the country is poorly positioned to absorb the shock. The likely result is deeper economic strain, faster inflation, and worsening humanitarian conditions in the months ahead.
