A Distant War, A Local Cost

From Hurmuz to Tunis: How a Distant War Could Shake Tunisia´s Economy

 The Strait of Hormuz lies thousands of kilometres from Tunisia. Yet when tensions in the Gulf escalate into a wider conflict, particularly any disruption to maritime traffic, the consequences could be felt much closer to home, including in Tunisian households.

The Strait handles a significant share of the world’s oil exports. Military confrontations can therefore send global energy prices sharply higher. For Tunisia, a country that imports a large part of its energy needs while already struggling with fiscal pressures and sluggish growth, the consequences could extend far beyond petrol stations.

The issue is not merely geopolitical; it is budgetary, social and increasingly strategic. It is not an abstract debate among economists; it is a question that will land on every Tunisian family's monthly budget.

Tunisia’s 2026 Finance Law was drafted on assumptions of relative stability in international markets. The state budget provides for expenditures of around TND 63.575 billion against resources estimated at roughly TND 52.56 billion, leaving a deficit exceeding TND 11 billion.

Those projections were established before fears of a broader regional conflict began pushing energy markets into renewed uncertainty.

"Given that the 2026 Finance Law is based on the hypothesis fixing the barrel price at TND 63.3, any further increase in this price of just one dollar, over a one-year period, would lead to a rise in the energy bill of TND 160 million, which would further increase public expenditure, given that the state continues to subsidise petroleum products," Chartered accountant Anis Wahabi told the Tunisian news agency in March.

Consequently, the Tunisian economy remains highly vulnerable to external shocks, especially fluctuations in hydrocarbon prices. Domestic energy production has steadily declined over the years, increasing dependence on imported oil and gas. As a result, any sustained rise in international prices immediately places additional strain on public finances.

One of the most sensitive issues concerns subsidies. For years, Tunisia has maintained a costly subsidy system aimed at limiting the impact of global price increases on consumers, particularly for fuel, electricity and basic commodities.

With the surge of international crude prices, the government now faces an uncomfortable fork in the road: protect citizens from price hikes by spending money it does not have, or let those hikes reach the pump and the supermarket shelf.

Admittedly, neither option is politically or socially easy. Maintaining subsidies at elevated levels would deepen pressure on state finances at a time when Tunisia is already relying heavily on domestic borrowing and facing significant debt servicing obligations.

Passing higher prices on to consumers, meanwhile, risks triggering a broader inflationary wave.

Fuel prices do not stop at the petrol pump. They influence nearly every sector of the economy. Indeed, higher fuel costs raise the price of transporting food products, imported goods and industrial materials. Farmers face more expensive irrigation and logistics costs. Manufacturers encounter rising production expenses. Delivery costs increase. Airlines and shipping companies revise prices upward.

Follow a single rise in oil prices and watch where it goes: the truck driver pays more to fill up, so the grocer pays more for delivery, so the family pays more for fruits, veggies and eventually a loaf of bread.

Tunisian families know this pressure already. Many have quietly adjusted: buying less meat, cutting back on outings, stretching salaries a little further each month. A new energy shock would hit people who have very little room left to absorb it, consequently deepening social tensions. Public sector salary increases have remained a contentious subject for months amid efforts to contain public spending. At the same time, inflation has steadily eroded real incomes.

If energy prices rise significantly because of a regional conflict, pressure would likely intensify from both unions and workers struggling with rising living costs, particularly after the recently ratified wage increases, deemed by the Labour Union “insufficient,” and considered "acceptable" given the country's economic capacities, according to labour law specialist Hafedh Amouri.

The state could therefore find itself trapped between competing imperatives: containing inflation, preserving social stability and limiting the expansion of the deficit.

The private sector would also feel the impact. Businesses dependent on imported raw materials or transport-intensive activities could face declining margins and rising operating costs. Smaller companies, already weakened by years of slow growth and limited access to financing, may struggle to absorb additional shocks.

Tourism, one of Tunisia’s most important sources of foreign currency, may also be indirectly affected.

Although Tunisia itself is geographically distant from the Gulf, periods of instability in the broader Middle East often influence international travel patterns, investor confidence and insurance costs. Higher aviation fuel prices could additionally increase travel expenses for airlines and tour operators.

Beyond the immediate economic consequences, the crisis would once again expose Tunisia’s structural vulnerability in the energy sector. The country’s dependence on imported hydrocarbons means that external geopolitical events continue to have a direct impact on domestic economic stability.

Every major increase in oil prices widens the trade deficit, increases pressure on foreign currency reserves, and complicates budget management.

This recurring fragility has revived debate over the urgency of accelerating Tunisia’s energy transition.

Indeed, in November 2025, the Government of Tunisia and the World Bank concluded a financing agreement to support the country’s energy sector modernisation agenda through the Tunisia Energy Reliability, Efficiency, and Governance Improvement Program (TEREG). This five-year program of $430 million aims to support the Government to deliver a sustainable, reliable, and affordable electricity supply by accelerating renewable energy deployment, strengthening the performance of the national electricity utility (STEG), and enhancing overall sector governance.

Consequently, Tunisia has recently launched several renewable energy projects, particularly in solar and wind power, while setting ambitious targets for increasing the share of renewables in electricity production.

Yet progress has often been slower than expected because of administrative delays, financing constraints and regulatory complexities.
Champions of renewable energy argue that the issue is no longer solely environmental. Reducing dependence on imported hydrocarbons is increasingly viewed as a question of economic sovereignty.

Each additional megawatt generated through solar or wind energy potentially reduces exposure to volatile international oil markets. In a country with high solar potential, advocates believe the energy transition could eventually help ease pressure on public finances while improving long-term resilience.

The challenge, however, lies in the transition period.
Tunisia cannot abruptly free itself from imported energy dependence, particularly while domestic demand continues to grow and public investment capacity remains constrained.

For now, the country remains closely tied to the fluctuations of international markets and the uncertainties of geopolitics. The instabilities around the Strait of Hormuz remain extremely devastating to the global economy. For Tunisia, the lesson is becoming increasingly difficult to ignore. A conflict unfolding far beyond its borders can still shape inflation, widen budgetary pressures, complicate wage negotiations and, ultimately, affect the daily lives of millions of citizens.

In that sense, for Tunisians, the distance between Hormuz and Tunis may be as close as the neighbourhood supermarket.