The latest military escalation involving the United States of America and Israel against Iran has once again thrust global oil markets into uncertainty.
For Namibia, the warning lights are flashing bright red.
With tensions centred around the strategically vital Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, any prolonged conflict now carries immediate consequences for fuel-importing nations, including Namibia.
Analysts advise that with decisive use of the National Oil Storage Facility (NOSF) in Walvis Bay, domestic consumers could be spared the full brunt of rising global oil prices.
Ironically, the energy ministry announced on Friday that local fuel prices for March will remain unchanged. The ministry attributed this to declining freight rates, improved vessel availability and easing congestion in key shipping corridors. According to executive director Moses Pakote, the increased supply of Very Large Crude Carriers (VLCCs) and lower bunker fuel prices helped reduce voyage costs.
Yet beneath this short-term reprieve lies a more troubling reality. Crude oil prices have been climbing due to tightening global supply and stronger-than-expected demand from major economies. Production discipline by OPEC and its allies has sustained upward price pressure, while geopolitical risk premiums linked to instability in major producing regions have added further volatility. A relatively weaker US dollar, influenced by expectations of expansionary policy from the US Federal Reserve, has also complicated the pricing equation.
Independent economist Josef Sheehama warns that Namibia’s heavy reliance on imported refined fuel leaves it particularly exposed. “Geopolitical tensions involving key producers such as Iran and Saudi Arabia, especially around critical shipping corridors like the Strait of Hormuz, can push up international prices even when physical supply remains uninterrupted,” he noted.
In mid-2025 alone, Namibia imported petroleum products worth approximately N$1.6 billion (about US$92 million), primarily from Oman, Bahrain and Saudi Arabia. While these established trade routes offer logistical stability, they also concentrate exposure to Gulf-related risks. Any sustained conflict in the region would likely inflate Namibia’s import bill, widen the country’s current account deficit and feed inflation through higher transport and production costs.
The concern is not hypothetical. Oil markets typically react to geopolitical shocks with immediate price spikes, reflecting trader expectations rather than actual supply shortages. A prolonged disruption in or near the Strait of Hormuz amplifies these reactions, particularly if insurance premiums for tankers rise or shipping tankers are rerouted.
Sheehama furthermore argues that Namibia must respond proactively rather than reactively. This includes building and maintaining adequate strategic fuel stocks, diversifying supply partners beyond the Gulf region, utilising financial hedging instruments to cushion against price spikes and accelerating investment in renewable energy and domestic energy capacity.
Industry insiders echo this view. One senior figure, speaking anonymously, stressed that strategic reserves are now more critical than ever. “Government has built strategic infrastructure for this purpose,” he said, referring to the NOSF in Walvis Bay. “But importers are effectively left to their own devices, while Namcor only holds around a 7% market share. That means we remain largely under the control of international traders who treat oil markets like a stock exchange.”
The insider warned that if the conflict escalates and oil prices remain elevated, the National Energy Fund (NEF) could face significant depletion as the government attempts to stabilise domestic pump prices. “We remain at the mercy of the markets for the foreseeable future,” he added. “Our statutory pricing mechanisms are legally based constructs. They determine domestic pricing formulas, but they do not guarantee physical access to supply. That is where government intervention may now be necessary.”
Namibia’s fuel pricing mechanism is designed to shield consumers from extreme volatility through smoothing adjustments. However, it ultimately tracks international benchmark prices. If Brent crude were to surge sharply and remain elevated for months, the cost recovery model would come under severe pressure.
War
The geopolitical backdrop is deteriorating rapidly. Iranian officials have vowed retaliation following US and Israeli strikes. Tehran has signalled further military responses against US bases in the Gulf. Meanwhile, Russia’s president, Vladimir Putin, condemned the killing of Iran’s supreme leader, Ayatollah Ali Khamenei, as a violation of international law, while China strongly criticised the strikes and called for de-escalation.
Such diplomatic fractures between major global powers increase the risk of broader instability. For energy-importing economies like Namibia, this translates directly into economic vulnerability.
Fuel costs ripple through every sector, from agriculture and mining to manufacturing and logistics. Rising diesel prices increase food production costs. Higher petrol prices affect household disposable income, and transport inflation filters into consumer prices. For a developing economy such as Namibia already managing fiscal constraints, an oil shock could undermine growth projections and complicate monetary policy.
This is where the NOSF in Walvis Bay comes into play as a strategic storage facility designed precisely for moments like this. Its purpose is to provide a buffer against supply disruptions and price shocks.
Meanwhile, industry gurus advise that strengthening strategic reserves alone is not enough. Diversification of supply sources, potentially including West African refiners or alternative trading partners, could reduce concentrated exposure to Gulf tensions. Expanding renewable energy generation would further lessen dependence on imported fossil fuels over the longer term.
The Strait of Hormuz may be thousands of kilometres away, but its stability is directly linked to the price Namibians pay at the pump. In a volatile world, strategic foresight is no longer optional. It is an economic necessity.
-Additional reporting by Nampa/AFP