Fuel: a drop in pump prices expected as early as June, according to the OMH

An imminent drop in fuel prices at the pump: a relief for Malagasy consumers on the horizon

In an economic context marked by persistent instability in the global oil market, the OMH’s recent announcement of the impending drop in fuel prices as early as June 2025 is a glimmer of hope for a country like Madagascar, which is entirely dependent on oil imports. The significant drop in the price of a barrel on international markets, combined with an anticipated reduction in logistics costs and stricter price regulation by the State, suggests a significant improvement in household purchasing power. However, this development is taking place within a complex geopolitical context where global fluctuations, the presence of oil giants such as TotalEnergies, Shell, BP, and Esso, and the commercial strategy of local players such as Carrefour, Leclerc, and Intermarché will all influence the reality experienced in the country. The dramatic rise in July 2022, which exacerbated economic insecurity, has left a lasting mark, making each decline hailed as a step toward the stabilization needed for economic recovery and bridging the social divide.

The root causes of the global oil price crash and their impact on Madagascar

The downward trend in global oil prices, which began several months ago, is rooted in a combination of economic, geopolitical, and strategic factors. The recent decline in the price of a barrel is primarily due to the increase in production by major producing countries, particularly during the meeting of the Organization of the Petroleum Exporting Countries (OPEC), which decided to increase supply capacity to meet declining demand. China and the United States, major players in the market in 2025, have also played a role by adjusting their energy strategies, which has shifted the market balance.

In Madagascar, this stabilization of international markets is only noticeable with a lag, due to the country’s dependence on imported refined petroleum products. Indeed, the cost of maritime transport and administrative formalities add a latency of approximately eight weeks between global price fluctuations and their local implementation, hence the anticipated timing of the decline starting in June 2025.

This timing factor is proving crucial for Malagasy consumers and economic actors who, after a year 2022 characterized by a record 44% increase in July, are now seeking to cushion this significant pressure on their budgets. Government regulations, notably monthly price revisions since January, have partially mitigated the impact in 2025, creating a dynamic of gradual price reduction. Key Factors Influencing the Oil Price Drop 🌍

The anticipated decrease in pump prices is expected to have a significant impact on several economic aspects, both at the macro and micro levels. On the macroeconomic level, a reduction in import and transportation costs could help stabilize inflation, which is also reduced by energy consumption. The drop in fuel prices, if confirmed, will represent a breath of fresh air for all stakeholders in the transport sector, particularly taxi-bus companies, logistics operators, and those in the agricultural sector, where energy dependence is crucial. Socially, this downward trend will ease household budgets, particularly those on low incomes who devote a disproportionate share of their resources to fuel purchases, as detailed in this in-depth study. The price reduction will also help curb the rise in the cost of living at a time when other essential expenses, such as food and education, remain under pressure.

A word of caution, however: this decline should not obscure the risks of destabilization for oil players or investments in the sector, as well as the potential impact of prolonged low prices, which could fuel tensions on the sustainability of reserves or the stability of local suppliers such as Cora, Carrefour, or Shell stations.

Positive Impacts 📉 Potential Risks ⚠️Improved purchasing power 🛍️

Stabilized economic inflation 📈

What the coming months hold 🔭

A likely continuation of the decline if the international context remains favorable 📉

Increased vigilance over the pricing strategies of large groups 🧐

Increased influence of local distributors such as Cora and Carrefour 🛒

Political and regulatory mechanisms governing fuel price fluctuations in Madagascar

• Faced with this downward trend, the legislative framework implemented by the Malagasy government, particularly through the OMH (National Office for the Management of Fuels), appears to be a crucial lever for regulating price fluctuations and protecting consumers. The implementation of monthly price reviews, which began in January 2025, is part of a policy of transparency and proactive intervention to limit potential abuses.
• These mechanisms also include monitoring gas station profit margins, setting maximum and minimum thresholds, and facilitating competition between local and international players. Collaboration with partners such as TotalEnergies, Shell, and local distributors also helps ensure consistency in pricing policy, thus avoiding sudden fluctuations that could exacerbate existing insecurity.
• Furthermore, the OMH’s official communication emphasizes the importance of price stabilization as a driver of economic development. Regulation must be combined with constant adaptation of fiscal policies and increased vigilance against any market manipulation, particularly through inventory control and transparency in oil operators’ reports.
• Regulatory Tools 🔧

Objectives 🌟

Monthly Tariff Reviews 🗓️

Profit Margin Control 💼

Collaboration with Local Distributors 🌍

Strategies of local distributors in the face of falling fuel prices

Major retailers such as Leclerc, Intermarché, and Carrefour, as well as Shell and TotalEnergies stations, are adapting their sales policies to maximize their competitiveness in the face of expected price declines. Their strategy focuses not only on reducing margins but also on a differentiated pricing policy based on geographic areas and target customers.

Local distributors are also taking advantage of the competition to offer lower prices, sometimes directly challenging those of international giants, in an effort to build customer loyalty. For example, in urban areas, some stations offer prices a few cents lower to attract as many customers as possible while maintaining a balance with their margins.

At the same time, these players could also diversify their offerings by offering additional services or engaging in communications aimed at raising awareness of the need for responsible fuel use. Highlighting initiatives supporting the ecological transition, or even partnerships with local stakeholders, would strengthen their position in an increasingly volatile market. Strategic Actions for Distributors 🏪

Reduce margins to attract customers 💰

Differentiated pricing by geographic area 🌍

Promote ancillary services (electric charging, maintenance) ⚙️

Responsible communication and awareness of environmental issues 🌱

Promoting local biofuels 🌱

Installing electric charging stations ⚡

Supporting renewable energy production 💧

Implementing tax incentive policies 💸

This scenario will depend on global geopolitical stability, national energy policies, and the ability of stakeholders to maintain a balance between supply and demand. Vigilance remains essential.

1. How can the government ensure effective regulation?

   By continuing regular price reviews, controlling margins, and collaborating with major distributors, while promoting transparency and fair competition.

2. What environmental initiatives can support this transition? The development of renewable energies, the promotion of biofuels and the installation of electric charging stations are all levers for building a more sustainable model in the long term.