Super Petrol prices likely to rise to Ksh.300 per litre over Israel-Hamas conflict - Energy CS Chirchir

In Kenya, fuel prices hit an all-time high in mid-October, with a litre of petrol increasing by Ksh.5.72 ($0.04), while diesel went up by Ksh.4.48 ($0.03). Kerosene, on the other hand, rose by Ksh.2.45 ($0.02) 

According to CS Chirchir, who testified before the National Dialogue Committee (NADCO) on Monday, petroleum product prices have risen from Ksh.10,584 (70USD) per barrel to Ksh.13,608 (USD 90) per barrel, and the situation could worsen given the ongoing conflict.

"We cannot do anything about the global pricing of petroleum which has soared from 70 dollars per barrel to 80 dollars and then to 90 dollars," CS Chirchir told the National Dialogue Committee.

There is apprehension that the escalating tensions in the region could drive up oil prices by choking a key transit route for seaborne cargoes of oil and gas from the Middle East to the global market, threatening central bankers' efforts to control high inflation.

If major Arab producers such as Saudi Arabia cut exports, global oil supply could fall by 6 million to 8 million barrels per day, sending prices to between $140 and $157 per barrel.

According to a Financial Times article cited by the CS, international prices are predicted to rise, potentially reaching USD 150 per barrel.

"And I read an article recently in the Financial Times recently that prices are likely to go up to USD 150 per barrel," he added.

"That would literally mean our products going to the highs of Ksh.300 per litre but we hope it does not get there.''

Among the issues that continue to worsen fuel prices are inflation, which, according to CS Chirchir, has caused the Kenyan shilling to depreciate, as well as the mop up of the US dollar, which has greatly affected the oil market, causing fuel prices to rise.

"Kenya is paying 200 USD per barrel for petroleum products while other countries are paying 300 USD Per litre," CS Chirchir added.

"We import products worth 500 million USD: 4 cargo diesel, 4 cargo petroleum, 1 cargo kerosene."

Instead of paying for the purchase of petroleum products after each shipment to Mombasa, CS Chirchir said the government has signed a memorandum with countries like Saudi Arabia and Abu Dhabi, which control large quantities of the world's oil reserves, to mitigate the runaway fuel prices.