News & market updates

The war in the Middle East is driving higher energy prices and major supply‑chain disruptions, which are boosting inflation and tightening global financial conditions. Energy importers, food and fertilizer‑dependent agriculture, tourism, manufacturing and banks face the greatest strain.

Brent fell about 1.08% to $111.56/bbl and WTI fell about 0.95% to $101.90 after reports President Trump told aides he was willing to end the campaign against Iran, trimming earlier risk-driven gains amid ongoing Strait of Hormuz and regional security concerns.

On 23 March 2026 the All-Party Parliamentary Group on Sri Lanka held a briefing in the UK Parliament reviewing ODI Global reports on Sri Lanka’s economic outlook and debt distress, noting progress in stabilising the economy since the 2022 crisis. Speakers highlighted opportunities for UK investment in renewable energy and the financial sector and stressed the need for macroeconomic stability, structural reforms and investor confidence.

The Sri Lanka–Benelux Business Council met with the Dutch Ambassador to discuss strengthening private‑sector links and potential collaboration in logistics and port development, renewable energy and maritime services; the Council will share a concept note on priority sectors and engagement initiatives.

The ASPI fell 1.33% (283.49 pts) to 21,092.24 as Colombo market opened lower amid rising oil prices and Mideast tensions; principal detractors included John Keells, NDB, Hayleys, Melstacorp and Commercial Bank while Lanka IOC and Browns Investments saw gains.

Escalating Middle East tensions pushed Brent crude above $100/bbl in March, prompting two domestic fuel price hikes and a drop in the LMD-PEPPERCUBE Business Confidence Index to 168. Tourism, remittances and domestic energy supply (gas) face downside risks that could keep confidence subdued.

Brent crude rose $2.43 to $115/bbl and is set for a record monthly gain (about 59%) after Houthi attacks widened the Middle East conflict, raising risks to shipping lanes around the Strait of Hormuz, the Red Sea and Bab el-Mandeb.

Government launches five-month 'Surakimu Lanka' program to promote voluntary energy conservation to manage potential fuel and electricity supply risks from the Middle East conflict and possible El Niño. It urges reduced peak-time use (6–10pm), shifting energy-intensive activities to daytime and highlights hydropower management.

Sri Lanka received 38,000 metric tons of fuel from India, President Anura Kumara Dissanayake said, thanking PM Narendra Modi and Dr. S. Jaishankar for the swift delivery.

A government monitoring committee warned current fuel quotas are insufficient and could trigger price increases for essential goods ahead of the Sinhala and Tamil New Year; five CPC officials will be appointed to assess needs and a QR-code system for fuel issuance will be introduced.

Asian stocks slumped as Brent crude rose 3% to $115.98, bringing monthly gains near 60% and raising inflation and recession risks. Markets have priced in higher Fed tightening and sovereign yields have jumped, pressuring energy, manufacturing, logistics, retail and financial sectors.

Ceylon Petroleum Corporation said Sri Lanka could reduce fuel prices if it secures a Murban crude shipment, noting no crude has arrived since the Feb 28 attacks; a shipment in April would allow price cuts and profit-sharing with the public.

Opposition Leader Sajith Premadasa urged the government to cut fuel taxes after India reduced excise duties; President Dissanayake said the government is reviewing the matter, noting monthly fuel tax revenue is about Rs.20 billion and diesel generated Rs.240 billion last year.

India sharply cut special excise duties on petrol to 3 INR/litre (from 13) and diesel to 0 INR/litre (from 10) to ease domestic costs, while Vietnam suspended environmental protection and special consumption taxes on petrol, diesel and jet fuel until April 15 amid rising global oil prices.

Government rolled out a special fuel distribution mechanism for manufacturing firms and has forwarded 2,551 manufacturing fuel requests to the Ceylon Petroleum Corporation. Firms needing <400 litres will get supplies from provincial stations, 400–6,600 litres via SLTB depots, and >6,600 litres directly from CPC; CEB/CPC instructed to ensure uninterrupted supply.

World Bank will provide immediate financial relief and policy support to countries hit by the Middle East conflict as commodity and shipping disruptions push up costs—crude oil ~+40% Feb–Mar, LNG to Asia ~+66%, and nitrogen fertilisers ~+50% in March.

Iran's Islamic Revolutionary Guard Corps said it prohibits shipping to and from ports of US- and Israeli-allied countries and declared the Strait of Hormuz closed, warning vessels will face harsh measures; three container ships were blocked today.

Blue Arc Manufacturing and the BOI signed an agreement to establish Sri Lanka's first containerised substation assembly factory to manufacture and export containerised substations, skid substations and switch rooms for Australian mining, tunnelling and construction sectors. Units will be assembled and tested to international standards and the company plans to expand into markets including solar and hydro.

Russia has agreed to supply fuel to Sri Lanka and is ready to immediately provide refined petroleum products, the Ceylon Petroleum Corporation said. CPC added fuel stocks are sufficient until May; a vessel with 35,500 mt of diesel has arrived and two more shipments are expected this month.

OECD cut its global growth outlook, projecting GDP growth of 2.9% in 2026 and 3.0% in 2027 as higher energy and fertiliser prices linked to the Middle East conflict drive up inflation and weigh on demand.

Fitch says an adverse Iran conflict through mid-2026 would reduce global real GDP by about 0.8% after four quarters versus its March baseline, driven mainly by higher oil prices and falling equity markets; inflation across the 'Fitch 20' would be ~1.3pp higher after four quarters.

Asian countries including Vietnam, Thailand, the Philippines, Indonesia and Sri Lanka are lining up to buy Russian oil as the Iran war blocks Middle East supplies, raising the risk that demand may exceed Russian export capacity. India and China already take about 80% of Russian exports and Ukrainian drone strikes have cut roughly 40% of Russia's oil-exporting capacity.

Colombo Stock Exchange opened higher, ASPI up 0.71% to 21,571.61, led by consumer durables and apparel with Teejay Lanka contributing Rs.546.8 million to morning turnover. Commercial Bank and Nations Trust Bank were top positive contributors; National Development Bank was the top negative contributor.

Russian Deputy Energy Minister Roman Marshavin said Moscow is prepared to support Sri Lanka in the energy sector and provide technical and machinery assistance during his official visit to Colombo.

Blue Arc Manufacturing and the BOI signed an agreement to establish Sri Lanka’s first containerized substation assembly factory to manufacture and export skid and containerized substations. Units will be assembled and IEC-tested in Sri Lanka for Australian mining, tunneling and construction projects, using local labour and modular, IoT-capable designs.

Gold held steady at $4,503.29/oz as investors awaited clearer signs on Middle East ceasefire talks; crude oil rose above $100/bbl and markets have priced out Fed easing this year.

Asian stocks struggled as Middle East ceasefire talks and widening conflict sent Brent crude to $103.35/bbl, stoking a surge in oil prices. The move lifted the dollar, pushed out expectations of Fed rate cuts and left MSCI Asia ex-Japan lower amid heightened market caution.

Central Bank Governor Nandalal Weerasinghe said imposing forex or trade controls is not the right response to Middle East conflict fallout, with the central bank keeping interest rates on hold and the government raising fuel prices to balance external and domestic demand. He added remittances remain strong, tourism is down, and the CB is using repo operations to mop up excess liquidity while warning that permanent sterilization is needed to avoid excess imports and pressure on the rupee.

The Central Bank of Sri Lanka held the policy rate at 7.75% and said gross official reserves stand at $7.3bn, providing buffers against external shocks. It projects headline inflation around 2% in March and expects inflation to converge to the 5% target by Q2 2026, while warning risks from Middle East energy volatility could change the outlook.