Motorists and other Kenyans may see fuel prices ease in the coming weeks after global crude oil prices dropped sharply following a ceasefire agreement involving Iran, the United States and Israel, raising expectations of lower fuel import costs.
The latest Central Bank of Kenya (CBK) weekly bulletin shows Murban crude oil prices fell by about Ksh1,319 per barrel to Ksh9,642 (USD74.41) from Ksh10,961 (USD84.60) a week earlier.
The decline of more than 12 per cent came as geopolitical tensions in the Middle East eased, reducing concerns over disruptions to global oil supplies that had pushed prices higher in recent weeks.
The CBK bulletin said Murban crude oil prices declined to USD 74.41 per barrel from USD 84.60 per barrel a week earlier, while spot gold prices rose slightly to USD 4,239.13 per ounce from USD 4,213.84 per ounce, reflecting increased foreign exchange market volatility.
CBK said the fall largely reflected the easing of tensions after the United States and Iran signed a preliminary ceasefire agreement.
The development is significant for Kenya, which imports most of its petroleum products and remains highly exposed to shifts in global crude oil markets.
A sustained drop in international oil prices could reduce the cost of fuel imports and increase the likelihood of lower pump prices in future reviews by the Energy and Petroleum Regulatory Authority (EPRA).
The latest decline follows Iran’s decision to reopen the Strait of Hormuz, one of the world’s most strategic oil shipping routes through which about 20 per cent of global crude supplies pass.
The waterway had raised concern after escalating tensions between Iran, Israel and the United States triggered fears of supply disruptions and possible spikes in global fuel prices.
For Kenya, the reopening of the route is especially important because the country’s government-to-government fuel supply programme relies heavily on petroleum products sourced from Gulf nations, including Saudi Arabia and the United Arab Emirates.
Under the arrangement introduced in 2023, Kenya imports fuel on credit terms from suppliers linked to Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Emirates National Oil Company (ENOC), helping stabilise fuel supplies and ease pressure on foreign exchange reserves.
Even so, Energy Cabinet Secretary Opiyo Wandayi has previously cautioned that changes in global oil prices do not immediately translate into lower pump prices in Kenya.
He explained that fuel discharged into the country during a given month is priced using international benchmark rates from the preceding month, creating a lag between global market movements and local pump prices.
If that pricing formula holds, the full impact of the latest decline in crude oil prices is likely to be reflected in the August fuel review. However, any relief could come sooner if the government and EPRA choose to intervene and pass on the benefits earlier.