Middle East Conflict Risks US$ 10-15M Weekly Loss for Ceylon Tea ☕📈

The ongoing military conflict in the Middle East has severely disrupted tea exports, with industry experts estimating a potential revenue loss of US$ 10 million to US$ 15 million per week due to logistical barriers and war risks. • Regional Impact: Approximately 52% of Sri Lanka’s tea exports are destined for the Middle East, a region that imported 125 million kg valued at US$ 750 million in 2025. Key markets include Iraq, Iran, Libya, Turkey, Saudi Arabia, Syria, and the UAE. • Supply Chain Disruptions: Major shipping lines have suspended services or hiked freight charges by US$ 1,800 to US$ 3,000 per container. Supply routes through the Strait of Hormuz and Suez Canal are largely avoided due to invalidated insurance and high war risks. • Economic Consequences: • Auction Prices: Overall prices dropped by Rs. 50/kg this week; low-grown tea (dominated by smallholders) fell by Rs. 75/kg. • Barter Deal: 95% of the "Tea for Oil" debt to Iran is settled, but further exports face uncertainty under US sanctions without a new mechanism. • Export Growth: Despite a 5% YoY increase in January 2026 (US$ 121.8 million), March figures are expected to decline sharply. • Industry Request: The Tea Exporters Association has urged the government to address cash flow constraints, subsidize freight/insurance costs, and recover US$ 50 million in pending payments from Iran.