A new report by the Central Bank of Kenya (CBK) has shown a decline in global oil prices ahead of the pump prices review by the Energy and Petroleum Regulatory Authority (EPRA) on January 14.
In its weekly review of the global economy, CBK indicated that the decline in prices was attributed to the US market which had a surplus supply.
With the surplus supply in the US, the demand for the other markets was not as high, leading to the drop.
“International oil prices declined during the week ending January 4, following an inventory build-up in the US. Murban oil prices declined to USD 78.83 per barrel on January 4 compared to USD 79.55 on December 28,” read the report in part.
A photo of the Central Bank of Kenya in Nairobi.
However, hopes of another fuel price drop could prove difficult given that the dollar has continued to dominate the Shilling. Just in one week, the Shilling shed against the greenbuck by over Ksh1.
“The Kenya Shilling remained relatively stable against major international and regional currencies during the week ending January 4. It exchanged at KSh 157.39 per US dollar on January 4, compared to KSh 156.09 per US dollar on December 28,” read the statement in part.
Given that oil marketers import fuel in dollars, the costs used in the purchase may remain high making pump prices to remain elevated.
Notably, EPRA also uses parallel rates than those issued by the CBK. The rates used for the pump calculations by EPRA are usually higher.
Nonetheless, the government could opt for the fuel stabilisation programme or subsidies as was witnessed during the December review.
The prices of diesel and super petrol were subsidised to cushion motorists despite a drop in global oil prices.
In December, Petrol prices were reduced by Ksh5, leading to the current pump price of Ksh212.36. Diesel and kerosene prices were reduced by Ksh2 and Ksh4.01 respectively.
Meanwhile, President William Ruto in November 2023 promised Kenyans a further drop in January, explaining that Kenyans would begin to reap the benefits of the government-to-government oil deal.
“You have seen that we have started to reduce the price of fuel. Next month (December 2023) the price will be reduced much more. That will also be the case in January 2024 until we get to a sustainable price,” Ruto stated during a rally in Kirinyaga County on November 18.
A petrol station attendant fueling a car in Nairobi.
Motorist Association of Kenya