The Central Bank of Kenya (CBK) has reported a drop in global oil prices ahead of the Energy and Petroleum Regulatory Authority’s (EPRA) scheduled fuel price review on February 14.
In its weekly bulletin released on Friday, February 7, CBK highlighted a notable decline in international crude oil prices. According to the report, Murban oil prices fell from Ksh10,131 per barrel on January 30 to Ksh9,916 per barrel on February 6.
The decline in oil prices is largely attributed to major oil-exporting countries ramping up their crude production, ensuring a steady supply to importing nations. Typically, fluctuations in global crude oil prices directly impact fuel costs in most countries, either increasing or lowering pump prices. However, in Kenya’s case, the effect is not as immediate due to the Government-to-Government (G-to-G) oil import deal the country has with four Gulf-based suppliers.
Under this arrangement, the price of oil Kenya imports is based on a fixed premium above global market rates. As a result, even when international oil prices decrease, Kenyan fuel prices do not always adjust at the same rate. Currently, Kenya is paying a premium of around $90 (Ksh11,610) per barrel for petrol and $88 (Ksh11,320) per barrel for diesel, which remains significantly higher than prevailing global market rates.
The nature of the G-to-G deal means that while the country is shielded from extreme price hikes in volatile market conditions, it also does not benefit from immediate price reductions when global oil prices drop. This means that unless EPRA factors in other market dynamics, the anticipated fuel price reduction may not be as significant.
Meanwhile, CBK also noted that inflation concerns remained stable during the week ending February 6, easing fears of a sharp rise in fuel costs. Despite a slight increase in inflation rates in some European nations between December 2024 and January 2025, Kenya’s core inflation rate remained unchanged at 2.7%.
Additionally, the Kenya shilling showed resilience against major global and regional currencies. CBK data indicated that the local currency exchanged at Ksh129.19 per US dollar on February 6, compared to Ksh129.25 per US dollar on January 30, 2025.
As EPRA prepares to announce the latest fuel prices on February 14, many Kenyans are hopeful for a price reduction, especially with the recent stability of the shilling and favorable monetary policies. If prices drop, it would mark a shift from last month’s review, where EPRA slightly increased fuel prices. On January 14, EPRA Director General Daniel Kiptoo announced that the cost of Super Petrol had gone up by Ksh0.2, diesel by Ksh2, and kerosene by Ksh3.
The upcoming review will be closely watched, as any adjustment in fuel prices has a ripple effect on transport, production, and the overall cost of living in the country.
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