Kenyans face tough times as global oil prices hit five-month high

Prices of Murban crude in the global market have climbed to highs last seen in October last year, setting up Kenyans for an end to months of a continued drop in local pump prices.

A barrel of Murban crude went for $90.61 Tuesday evening, the highest level since $91.57 per barrel posted in October last year, while those of Brent crude hit $90.57 from $90.45 in the same period. Murban prices are used by the Energy and Petroleum Regulatory Authority (Epra) as the benchmark in its monthly pricing cycle.

The rally, attributed to fading hopes of a ceasefire between Israel and Hamas and tightening supply on Mexico’s decision to cut crude exports, sets up Kenyans for expensive fuel in the coming months.

Pump prices have been on a sustained drop since December last year due to the global fall in crude prices. A litre of super petrol is going for Ksh199.15 ($1.59) in Nairobi while that of diesel is retailing at Ksh190.38 ($1.52).

“In an increasingly bullish oil market, both WTI(West Texas Intermediate) and Brent, look set to continue climbing on the back of a strong demand outlook and new supply issues,” Oil Price, a global site that tracks prices of the commodity, says.

The landed costs of the refined fuel that Kenya imports largely mirror the trends in global prices of crude oil, meaning that Kenyans should brace for tough times in the coming months.

The global rally may negate the gains that Kenyans have enjoyed at the pump due to the strengthening of the shilling against the dollar.

The shilling’s recovery against the dollar notably since February this year further added to the gains of the global drop in crude oil prices, significantly easing pressure on Kenyans.

A litre of super petrol has dropped by Ksh18.21 ($0.14) in Nairobi between December and last month, while that of diesel has fallen by Ksh13.09 ($0.1) and Ksh14.32 ($o.11) for that of kerosene.

The drops have been critical in easing inflation to 5.7 per cent last month from 6.3 per cent in February.

Kenya imports refined fuel meaning that the price of fuel is largely outside the government’s control, unlike other countries that refine crude.