The Kenyan government has raised alarms over possible increases in fuel prices next month, citing ongoing security challenges in the Middle East that threaten global oil supply chains.
Through the Ministry of Foreign Affairs, officials highlighted the recent closure of critical maritime routes, including the Strait of Hormuz and the Red Sea, following intensified conflicts involving Iran, the US, and allied forces.
Impact of Middle East Conflicts on Oil Supply
On July 20, the Iran-backed Houthi rebels in Yemen declared a naval blockade targeting Saudi-affiliated vessels in the Red Sea. This move threatens the Bab al-Mandeb Strait, a vital corridor for international oil and trade shipments.
The escalation follows months of instability marked by attacks on commercial ships, which have surged shipping and insurance costs. These increases directly affect the import prices of essential commodities such as fuel and fertiliser, potentially fueling inflationary pressures in Kenya and the region.
Government Measures and Fuel Pricing
- Fuel prices are calculated monthly based on the average landing costs of shipments received by the 10th day.
- The current pricing cycle runs from June 14 to August 14, with prices held steady since May.
- Super Petrol currently retails at Ksh214.03 per litre in Nairobi, Diesel at Ksh222.86, and Kerosene at Ksh191.38.
- The government relies on a government-to-government fuel import agreement with Saudi Arabia to mitigate potential price shocks.
Despite these efforts, Brent crude oil prices have surged by approximately 10-13% recently, reaching nearly $100 per barrel. This rise could translate into increased fuel costs if supply disruptions persist.
Deputy President Musalia Mudavadi cautioned that the ongoing threats to navigation freedom in key shipping lanes may exacerbate inflation by disrupting supply chains and raising maritime costs.
