Zero Carbon Analytics has released a new analysis on the impact of the Middle East conflict on oil prices and Pacific Island economies.

Conflict in the Middle East risks pushing Pacific Island Countries into an energy crisis, with around 80% of their energy reliant on mostly imported oil products.

Fiji's annual refined fuel import bill could rise by USD 670 million, a 115% increase from 2025 levels, equivalent to nearly three times the country's annual healthcare budget.

Vanuatu's refined petroleum import costs could surge by USD 120 million (11% of GDP), and Tonga's by USD 55 million (9% of GDP).

The report concludes that Pacific countries remain inherently exposed to such fluctuations while reliant on fossil fuels, and that the current crisis underscores the need to accelerate electrification and local renewable power generation.

Vulnerable countries

Amy Kong, Energy Transition Researcher at Zero Carbon Analytics said, “Our analysis shows the Pacific is particularly vulnerable to fossil fuel price volatility, and the economic impacts on these small economies is significant. These countries are already spending huge proportions of GDP on fuel imports, and that's only going to get worse if the crisis is prolonged. 

“The Iran oil crisis has exposed the vulnerabilities of small island states and their dependence on diesel. These are the countries that can least afford the volatility of the market. It has a huge knock on effect on their foreign reserves and economy. Every extra dollar spent on fossil fuels is money that can’t be spent elsewhere, such as on healthcare or education.”

She said that almost every Pacific nation has committed to 100% renewable energy, and the timelines are ambitious. The faster the international community supports that transition, the better the economic outcomes and the better the lives of people across the region

Dr Sivendra Michael, Permanent Secretary for Environment and Climate Change for the Republic of Fiji is also committed to renewables for future energy security.

"Fiji has made a clear commitment to deriving 100% of electricity production from renewable sources by 2035. Our national policies are clear that this commitment isn't just about reducing emissions, it's about protecting our economy and delivering long term energy security. 

“When our energy comes from the sun, wind and other indigenous sources of energy, nobody can cut off our supply and our exposure to oil price volatility and the implications of a war happening on the other side of the world are minimised. 

“Renewables will deliver us cheaper and more reliable power because Fiji has access to an abundance of renewable energy resources which we can utilise and control with the right technology.  We need our partners to back our commitment to low carbon transition.  Access to finance and technology is required  to deliver against our potential and ambition is now more critical than ever”

Vishal Prasad, President, Pacific Islands Students Fighting Climate Change (PISFCC)

"The Pacific is caught in a cruel contradiction where we are reliant on the very fossil fuels that are drowning our islands and now we find ourselves at the mercy of geopolitics. We had no part in this conflict, yet our people are paying for it every time prices spike. That isn't just about expensive petrol. It's more expensive food, transport, and the basics of life. 

“In outer island communities running on diesel generators, schools and clinics don't have a choice. This is what fossil fuel dependence actually looks like for our people. Rapid transition to renewable energy isn't just about the climate. It's the only path to economic security for the Pacific."

Established in 2012, the GSCC is a collaborative network of communications professionals in the fields of climate, energy and nature.