Kenya could once again be staring at an increase in fuel prices in the coming weeks after large exporters reduced their exploration.
BBC says that oil prices have surged after several of the world’s largest exporters announced surprise cuts in production pushing up the price of Brent crude oil above $84 (Sh11,222) a barrel after jumping by almost 6 per cent.
The RAC motoring club, however, stated that it does not anticipate a jump in gasoline prices unless the higher oil price is maintained for a number of days.
Brent crude prices rose after Saudi Arabia, Iraq and several Gulf states said earlier in the week that they were cutting output by more than one million barrels of oil a day.
“We don’t think cuts are advisable at this moment given market uncertainty - and we’ve made that clear,” said A spokesperson for the US National Security Council said
Additionally, Russia announced that it would continue to reduce 500,000 barrels per day through the end of the year.
The further depreciation of the shilling this month will exert more pressure on the exchange rate and make imports even more expensive for domestic consumers.
Since the value of the Kenyan shilling has fallen from Sh125 over a month ago to over Sh132 per US dollar as of Thursday, an increase in global costs will likely translate to increased landing costs which are eventually passed to consumers.
Fuel prices in Kenya had remained unchanged since the review in mid-November last year.
Energy and Petroleum Cabinet Secretary Davis Chirchir hinting late February that the prices will start to ease around April or May as the prices in the international market continue to drop.
However, if the move by exporters persists it will dim any hopes of a near future drop in fuel prices in the country.
Already Kenyans have been grappling with high fuel prices after the energy regulator raised the cap for super petrol by Ksh2 ($0.015) to Sh179 ($1.38) per litre in the last review.
In order to reduce the pressure on the exchange rate as foreign exchange reserves continue to decline, the government is currently in discussions with state-owned oil corporations from Gulf nations to permit deferred payments for oil imports.
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