News & market updates

Fuel dealers accuse the Ceylon Petroleum Corporation of unlawfully cutting dealer margins and question CPC’s reported Rs. 36.4 billion profit for 2025. CPC raised retail fuel prices from 1 May (auto diesel +Rs10 to Rs.392; super diesel +Rs15 to Rs.458; petrol 92 +Rs12 to Rs.410; petrol 95 +Rs15 to Rs.470; kerosene +Rs10 to Rs.265) and Lanka IOC said it revised its prices in line.

Sri Lanka's current account surplus fell 43.9% YoY to $531.5m in 1Q2026. The decline was driven by a sharply wider trade deficit (up 122% YoY), weaker services/tourism inflows with March surplus collapsing 90.7% YoY to $44.6m, and a 74.7% surge in fuel import costs.

The Sri Lanka Construction PMI (Total Activity Index) was 57.1 in March 2026, indicating continued expansion at a slower pace. Respondents reported fuel and raw-material shortages, rising costs and transport delays linked to the Middle East conflict, while new orders, hiring and purchases continued to rise.

Spirit Airlines said it had almost completed refunding passengers and returning crew after abruptly ceasing operations over the weekend; the carrier had more than 4,000 domestic flights scheduled through May 15. The shutdown followed financial strain from a sharp rise in jet fuel costs and failed rescue financing.

Planters’ Association warned the West Asia/Strait of Hormuz crisis threatens about 45% of Sri Lanka’s tea exports (≈US$680m) and called for urgent measures to secure fertiliser stocks, provide working capital for smallholders and diversify export markets.

Planters’ Association urged urgent action to stabilise tea production and costs, noting 45% of exports (~$680m of $1.5bn) go to Middle Eastern markets and wages rose to Rs1,750/day from 1 Jan 2026. It warned fertiliser supply risks could jeopardise the 2026 300m kg target and called for fertiliser security, working capital for smallholders and market diversification.

Sri Lanka's Consumer Sentiment Index fell 16 points in March to 70, the lowest since June 2024 and the steepest monthly drop since Jan 2021. The decline reflects rising cost of living, energy and fuel concerns, heatwave risks to utilities, and trade-union action including a GMOA strike.

Brent crude rose above $120 a barrel, briefly hitting $122 — its highest since 2022 — after disruptions around the Strait of Hormuz and reports of a potential US blockade of Iran's ports. The World Bank warned energy prices could surge 24% in 2026 if acute disruptions ease.

Sri Lanka's current account posted a Q1 cumulative surplus of USD 531m, even as the merchandise trade deficit widened to USD 2.3bn driven by a 74.7% jump in fuel import spending. Tourist arrivals fell 19.8% and services surplus dropped 42.4% while remittances rose 26.5% to about USD 2.3bn; gross official reserves were USD 7.0bn and the rupee was down 2.9% YTD by end-April.

Fuel dealers allege Ceylon Petroleum Corporation reduced dealer margins from 3% to 1.5% from 1 March 2025 and absorbed the deducted amounts into CPC’s reported Rs.36.4 billion 2025 profit, warning nearly 200 cooperative stations and many rural outlets face closure and urging renewed pricing transparency.

Sri Lanka's rupee closed at 319.75/320.00 to the US dollar, slipping below 320 as inflation reached the central bank's 5% target; the central bank intervened around 319.50 and conducted repo operations while bond yields remained broadly steady.

Sri Lanka's CCPI inflation rose to 5.4% in April 2026, up from 2.2% in March, after a roughly 35% government fuel price increase; the rise may prompt the Central Bank to tighten monetary policy sooner than expected.

Sri Lanka's headline inflation accelerated to 5.4% year‑on‑year in April 2026, up from 2.2% in March, driven mainly by higher transport (petrol +Rs.91.18/l, diesel +Rs.88.82/l) and utility costs (12.5kg LP gas +Rs.595.81; electricity). Food inflation also rose to 2.7%, supporting the Central Bank's projection but keeping monetary policy risks elevated.

PUCSL opened a public consultation on proposed electricity tariff adjustments for Q2–Q3 2026 after the National System Operator estimated a Rs.38 billion generation-cost deficit. The government will provide a Rs.15 billion subsidy from 10 May and PUCSL aims to decide on 9 May.

Daily FT will raise its cover price to Rs. 100 from 4 May due to higher distribution, energy and imported material costs.

Colombo Stock Exchange closed lower with the ASPI down 0.38% to 22,549.53 and market turnover at 3.44 billion rupees; capital goods led turnover (984.6 million). Lion Brewery and Watawala Plantations were top positive contributors while Dialog Axiata, John Keells and Commercial Bank were top negatives; Brent rose above $113.

Colombo market closed in the green for a fourth straight session as the ASPI rose 0.07% to 22,635 and the S&P SL20 gained 0.18% to 6,241.01; turnover was about Rs.4.2bn and foreign investors were net sellers of Rs.332.5m. CINS, BREW and JKH were among top contributors while diversified financials and banks led turnover.

Brent crude jumped to around $115 a barrel after reports the US is preparing an 'extended' blockade of Iran’s ports, raising concerns over supply via the Strait of Hormuz. The disruption has driven oil volatility and prompted forecasts of higher energy prices if conflicts persist.

The United Arab Emirates quit OPEC and OPEC+, removing a key Gulf member and weakening the cartel's cohesion, with potential implications for global oil supply and prices. The move comes amid disruptions to shipments through the Strait of Hormuz after attacks linked to the Iran war.

Secondary bond yields held broadly steady as markets stayed subdued ahead of a Rs. 140 billion Treasury Bill auction (Rs.55b 91-day, Rs.45b 182-day, Rs.40b 364-day). Liquidity surplus stood at Rs.231.90b and USD/LKR closed around 319.00/320.00.

The UAE will quit OPEC from May 1, freeing its 5 million bpd capacity and raising short-term market volatility and the risk of higher global oil prices. For Sri Lanka, a net oil importer spending nearly a fifth of its import bill on energy, this could increase the fuel import bill, pressure the rupee and drive inflation while accelerating calls for bilateral supply deals and renewables.

Brent crude rose above $110, trading as high as $112.70 a barrel, the strongest in three weeks. The jump stoked inflation concerns, pushed up sovereign bond yields and revived expectations that central banks may lift interest rates.

The United Arab Emirates quit OPEC and OPEC+, removing a key oil producer with spare capacity and potentially freeing it to raise output; the move weakens OPEC's collective influence and could lead to greater oil-price volatility.

IFC will invest up to $18 million via a local‑currency loan in WindForce PLC to develop Sri Lanka’s first 100 MW utility‑scale solar plant, expected to generate about 220 GWh/year. The project includes advisory support, enables future battery storage, and is projected to create over 3,000 jobs and lower electricity costs.

Rising energy costs from the Iran war are widening economic strain across emerging markets, prompting tighter monetary policy and fiscal pressure; the IMF cut growth for emerging and developing economies to 3.9% from 4.2%, with countries like Sri Lanka, Egypt and Pakistan highlighted as vulnerable.

Sri Lanka faces structural energy insecurity—hydro-dependent, import-reliant thermal generation and an ageing grid—while rooftop solar reached about 9.5% of supply in 2025 but is constrained by grid saturation and high battery costs. Recommended near-term policy fixes include storage subsidies, community microgrids, time-of-use tariffs and accelerated smart meter rollout.

Former CPC MD Susantha Silva said diesel landed cost is nearing $350 per barrel, domestic diesel is being sold at a loss exceeding Rs. 280 per litre, and import financing for a 40,000-tonne shipment has risen to about $70m, straining Sri Lanka's fuel import model.

Secondary bond yields were broadly steady as money-market liquidity rose above Rs.200bn and the Central Bank drained Rs.25.00bn via an overnight repo at a weighted average rate of 7.70%. January fiscal data showed revenue and grants up 35.3% YoY to Rs.468.75bn and the primary surplus up 86.7% YoY to Rs.222.82bn; USD/LKR closed around Rs.319.

Sri Lanka's apparel exports fell 8% in Q1 2026 year-on-year, worsening from a 3% decline in January to 11% in February and March. The sector cites higher operating costs—fuel and electricity adding nearly USD 3m monthly—and calls for energy reform, GSP+ renewal, U.S. engagement and expanded India access.

Oil rose more than 1% after US‑Iran peace talks stalled and shipments through the Strait of Hormuz remained limited; Brent was $106.68/bbl and WTI $95.35.