News & market updates

The Economic Surveillance Committee met at the Presidential Secretariat to discuss urgent measures to stabilise Sri Lanka's economy amid the Middle East conflict, focusing on risks from fuel imports, remittances, trade, tourism and export links.

The IEA has proposed the largest-ever release of oil reserves to offset supply disruptions from the war on Iran, prompting choppy oil prices (Brent $87.91/bbl; WTI $83.52/bbl). G7 leaders are discussing emergency stock releases as strikes and refinery outages have tightened supply and raised volatility.

Global markets steadied after a brief oil pullback following reports the IEA proposed the largest-ever release of reserves, with Brent at $87.89/bbl. Investors remain anxious as intensified Middle East fighting raises inflation risk, supporting the dollar and keeping bond yields and central-bank hawkishness in focus.

The Government has formed an Economic Surveillance Committee chaired by Labour Minister Dr. Anil Jayantha Fernando to monitor and recommend responses to the economic fallout from the Middle East conflict, which risks higher fuel costs, reduced remittances (about 1 million migrant workers) and FX pressures. UNCTAD warns Strait of Hormuz disruptions have pushed Brent above $90 and could raise freight and fertiliser costs, amplifying spillovers to trade and vulnerable economies.

The Ceylon Chamber Export Barometer Survey 2026 found more than half of exporters view Sri Lanka's investment climate as worse than peers, citing policy/regulatory uncertainty, labour and energy costs. The 90-respondent survey shows exporters are diversifying and seek a National Single Window, digital systems, capacity-building and FTAs to improve competitiveness.

Oil fell to about $93 a barrel from nearly $120 after US President Trump said the war in Iran would end "very soon", prompting global market gains (FTSE +1.3%, Kospi +6%+, Nikkei +3.1%).

The Ceylon Petroleum Corporation revised domestic fuel prices on March 1 and again on March 9 after the Petroleum Storage Terminals Company said incoming shipment costs rose sharply; authorities say stocks cover about 30 days and the hike aims to avoid a larger adjustment later.

Falling global oil prices and stronger external metrics prompted a relief rally in Sri Lanka’s secondary government bond market, driving yields lower across the curve (e.g., 01.08.26 at 8.30%, 15.02.28 at 9.10%). Ahead of a Rs.130bn T‑bill auction, money‑market liquidity stayed ample (net surplus Rs.335.36bn) and USD/LKR closed around Rs.310.90/311.00.

Fitch warned the Iran conflict could raise credit risks for emerging markets such as Sri Lanka by raising energy prices and disrupting remittances, exchange rates, fiscal subsidies and access to international finance.

Colombo market rebounded as the ASPI rose 2.17% (474.38 pts) to 22,378.52 after global oil prices fell below $95/bbl, with gains led by banks and blue-chips including HNB, SAMP, COMB and DIAL and turnover of about Rs.4.48bn.

The Cabinet approved a 'Committee on Economic Surveillance' chaired by Dr. Anil Jayantha Fernando to monitor and assess potential economic impacts on Sri Lanka from the Middle East conflict. The committee will review sector risks and submit policy recommendations to the Cabinet.

Sri Lanka's rupee strengthened to 310.95/311.05 per USD (from 311.60/311.90) and government bond yields fell across maturities (e.g., the 15.09.2027 bond to 8.45–8.50% from 8.80–8.90%). A Rs130,000 million Treasury bill auction is scheduled for March 11; yields declined following a global energy price drop.

Colombo Stock Exchange's ASPI rose 2.17% to 22,378.52 on Tuesday as global oil fell below $100/bbl. Hatton National Bank, Sampath Bank, Commercial Bank and Dialog Axiata were top positive contributors; Softlogic Holdings (up 47.22% after six crossings) and Renuka Hotels saw notable turnover.

Airlines have started broad fare hikes after jet fuel surged to roughly $150–$200/barrel amid the Middle East conflict; Air New Zealand raised fares (domestic +NZ$10, short‑haul +NZ$20, long‑haul +NZ$90) and suspended its 2026 outlook. Vietnam Airlines has asked authorities to remove a jet fuel tax as travel disruption and tourism losses mount if the conflict persists.

Colombo Stock Exchange opened higher as global oil prices fell below $100/barrel; ASPI rose 1.85% to 22,310.23 and S&P SL20 rose 2.41% to 6,276.93 with turnover of 757 million rupees. Oil eased after US President said the US‑Israel–Iran conflict may be nearing an end and announced US Navy escorts for tankers.

Sri Lanka's rupee strengthened to 311.0/20 per USD (from 311.60/90) and secondary government bond yields fell (e.g. 15.02.2028 at ~9.05–9.09% from ~9.20–9.26%) as global oil prices eased and geopolitical tensions subsided.

Oil prices fell more than 6% after U.S. President Donald Trump predicted de-escalation in the Middle East: Brent fell $6.51 (6.6%) to $92.45/bbl and WTI dropped $6.12 (6.5%) to $88.65. Markets remain volatile after recent supply cuts and talk of sanctions relief and reserve releases.

IMF Director Kristalina Georgieva warned a prolonged war could raise global energy prices and lift inflation, testing economic resilience and placing new demands on policymakers.

Government raised retail fuel prices across the board: Petrol Octane 92 +Rs24 to Rs317, Octane 95 +Rs25 to Rs365, Auto Diesel +Rs22 to Rs303, Super Diesel +Rs24 to Rs353, kerosene +Rs13 to Rs195. Lanka IOC mirrored CEYPETCO's increases.

Sri Lanka's tourism crossed 600,000 arrivals in 2026 with YTD growth of 9%, but arrivals in the first eight days of March fell 30.5% YoY due to the Middle East conflict and aviation disruptions. Officials warn a one-week Middle Eastern airspace closure could cost about $10–15m and higher fares from longer routings are expected.

Brent crude topped $119/barrel (trading around $110) after US-Israel strikes on Iran, a ~50% rise since Feb 28 that sent global stocks lower; gold benchmarks climbed above $5,400/oz, lifting the metal's estimated market value to $30–35 trillion.

The ASPI plunged 3.51% to 21,904.14 as panic selling and a >25% surge in crude to about $115/bbl on Middle East conflict hit the CSE; banking and blue-chip stocks (Commercial Bank, HNB, JKH, Sampath, C T Holdings) led declines while Lanka IOC rose.

Transparency International Sri Lanka has filed RTI requests with the Lanka Coal Company, Energy Ministry, Ports Ministry and other bodies seeking certified documents on coal procurement and quality for the Norochcholai (Lakvijaya) power plant amid allegations of tender irregularities and inferior coal shipments.

Frontier Research warned that a sharp rise in global oil prices from the Middle East conflict could raise Sri Lanka's petroleum import costs and push up inflation via higher transport and electricity prices. The firm also flagged risks to tourism from rerouted flights and higher travel costs, which could weaken external sector earnings.

Secondary bond yields rose sharply after Brent crude jumped over 15% above $100/bbl, with key maturities trading in ranges from 8.60% to 11.00% and a Rs.130bn Treasury bond auction scheduled (1 Mar 2030, 15 Jun 2034, 15 Aug 2036). Net liquidity was Rs.334.72bn and USD/LKR closed at 311.60/311.90.

Brent crude jumped past $110/bbl in March 2026, prompting Sri Lanka to raise diesel 7.8% and petrol 10%, which widens the import bill, pressures reserves and has devalued the rupee. The shock raises energy and transport costs, risking higher inflation and strain on fuel importers and the power sector.

Sri Lanka's rupee weakened to 311.60/90 per US dollar and government bond yields rose after global energy prices increased; selected yields included the 15.10.2029 at 9.60–9.70% and the 01.06.2033 at 10.60–10.70%.

Colombo's ASPI plunged 797.77 points (3.51%) to 21,904.14 as global oil prices surged over 20% after West Asia supply shocks. Major negative contributors were Commercial Bank, John Keells, Hatton National Bank, Sampath Bank and National Development Bank, with heavy selling in banks (Rs.1.86bn).

The Iran conflict has pushed oil above $110/bbl, forcing central banks to weigh supporting growth against fighting higher inflation. Emerging Asian central banks may reverse dovish stances or intervene to defend currencies amid risks of capital outflows and stagflation.

Government will maintain cost-reflective pricing for fuel and electricity despite rising global oil prices, avoiding subsidies that would burden state finances. Officials warned this could cause a short-term inflation spike to around 5–6% and dent export competitiveness (tea exports are exposed to the Middle East).