KENYA’S FUEL WARNING: We could be heading into another fuel-price shock.
EPRA announces new pump prices tomorrow, September 14, with changes taking effect September 15. Petrol in Nairobi is currently Sh214.03 a litre; diesel is Sh217.86.
But tomorrow’s announcement may not be the biggest problem. The bigger danger is what happens next month.
Brent is back above $100 a barrel, and Kenya imports almost all its fuel. When global oil prices rise, we eventually feel it at the pump.
But this time, the problem isn’t only the price of oil. Its getting the oil from there.
Traffic through the Strait of Hormuz has collapsed to just a handful of vessels a day. Saudi Arabia’s alternative pipeline to the Red Sea was shut after drone attacks. The Houthis are also putting more pressure around the Red Sea and Bab el-Mandeb and are capturing more areas.
The main route is badly disrupted. The alternative has been hit. Another route is under threat. That means fuel prices are already high, but transporting the fuel is now becoming even more difficult, creating a shortage and leading to an increase in prices.
That will eventually get reflected in the fuel price in Nairobi, Mombasa, Kisumu and Eldoret.
And there’s one number I’m watching closely: diesel.
The IEA says Gulf diesel exports in August were only about 390,000 barrels a day, just over a quarter of pre-war levels. Gulf and Russian diesel exports combined were 1.6 million barrels a day lower than in February.
That is important because diesel moves our food, powers farms, runs generators, keeps factories operating and transports goods across the country.
When diesel rises, the shock doesn’t stay at the petrol station. It reaches matatu fares, food prices, transport costs and eventually the shop. We saw this earlier this year when the Middle East crisis pushed Kenyan fuel prices sharply higher. Now the cushion is thinner.
The Petroleum Development Levy fund used to absorb some of these international price shocks has reportedly been heavily depleted.
So yes, September 15 is important.
But if oil stays above $100, shipping remains disrupted and diesel supplies stay tight, October could hurt much more.
Image credits -The indian express