Global crude oil prices have shown a downward trend, offering the possibility of a third consecutive monthly decrease in fuel prices in Kenya. The Energy and Petroleum Regulatory Authority (EPRA) is anticipated to review monthly pump prices next Wednesday, considering the impact of low global crude prices.

The prices of crude oil on the OPEC basket averaged $78.21 per barrel in January, slightly dropping to $77.47 per barrel in the first week of February. Brent prices hit a low of $75.91 per barrel in early January, the lowest recorded since June the previous year. Given that Kenya’s pump prices are linked to the previous month’s imports, consumers might witness another decline in pump prices if the government decides to pass on the benefits.

Despite the significant drop in global prices, Kenyan consumers feel they have yet to fully benefit due to high taxes, including a return to 16 percent VAT from eight percent last year. In the January-February cycle, Super Petrol decreased by Ksh5, Diesel by Ksh5, and Kerosene by Ksh4.82 per liter, following a similar drop in December-January.

EPRA observed reductions in the landed costs of imported super petrol, diesel, and kerosene, translating to lower retail prices. For instance, super petrol, diesel, and kerosene in Nairobi are currently retailing at Sh207.36, Sh196.47, and Sh194.23 per liter, respectively. However, the weakening shilling against the dollar has contributed to costly imports, impacting overall prices.

Furthermore, freight costs have become a concern, particularly due to attacks on vessels in the Red Sea by Iran-backed Houthi rebels in Yemen. This has led to shipping companies rerouting vessels, potentially increasing costs. Although Israel’s war on Gaza raised fears of affecting global fuel supplies, oil-producing countries have been cutting output to stabilize prices amid market uncertainties.

While the Port of Mombasa remains unaffected, the Consumers Federation of Kenya advocates for government intervention to address taxes and levies on fuel products, ensuring consumers benefit during periods of low global prices. Additionally, the recent announcement by the OPEC Secretariat of “voluntary cuts” in production aims to support oil market stability and balance.

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