Expensive Crude Oil Likely To Push Global Fuel Prices Up

Kenyans should brace for tougher times ahead as fuel prices and its products are likely to surge further due to expensive crude oil prices. The increase in crude oil prices has been attributed to reduced supply by major producers and the partial shutdown of a US refinery.

Analysts now project a jump in the prices per barrel to $ 114 from the current $ 101.67 due to reduced supply, and increased demands as key economies recover from the impacts of the covid 19 pandemic.

Ministry of Petroleum and Mining Principal Secretary, Mr. Andrew Kamau had earlier stated that Kenya has managed to keep gas prices low compared to other countries, with the government disputing the plan to raise gas to 185 shillings.

Instead, the gas prices increased by only 5 shillings per liter compared to other countries, where gas hit a high of 200 shillings per liter. Domestic retail prices of fuel in the country are however still high compared to last year

For instance, in Nairobi, the cost of Super Petrol, Diesel, and Kerosene currently stands at 159.12, 140, and 127 shillings respectively. An earlier report by the Petroleum Institute of East Africa (PIEA) noted that the current political uncertainty might also affect the petroleum industry resulting in high fuel prices in the coming days.

Last month the government released 16.6 billion shillings in fuel subsidy to cushion Kenyans from the price hike. The subsidy covers 25.56 shillings for super petrol, 48.19 shillings for diesel, and 42.43 shillings for kerosene.

The situation would be unbearable for Kenyans without the subsidy, as the commodities above would be retailing at 184.68 shillings per liter, 188.19 shillings, and 170 shillings, respectively.

Other crude oil products such as cooking oil are among the most expensive commodities in the country. The Kenya National Bureau of Statistics (KNBS) data indicated a liter of cooking oil had increased to 387.98 shillings in June, 51.7 percent compared to 225.83 shillings the same month in 2021.

The Retail Traders Association of Kenya (RETRAK), the retail sector lobby group, have defended the rising commodity prices citing that buying price from the manufacturers has risen dramatically due to increased costs of manufacturing, while retailers’ margins have decreased due to their attempt to maintain prices.

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