Energy CS Davis Chirchir believes that the Israel-Hamas war may worsen gasoline prices globally and drive up the cost of a litre of Super Petrol to Ksh. 300.
Fuel costs in Kenya reached an all-time high, with a litre of gasoline rising by Ksh.5.72 ($0.04) and a litre of diesel by Ksh.4.48 ($0.03). Conversely, kerosene increased by Ksh. 2.45 ($0.02).
In his testimony before the National Dialogue Committee (NADCO) on Monday, CS Chirchir stated that the cost of petroleum products has increased from Ksh. 10,584 (70 USD) to Ksh. 13,608 (90 USD) per barrel, and given the continuous violence, things may get worse.
CS Chirchir addressed the National Dialogue Committee, “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.”
Many worry that rising tensions in the area may endanger central bankers’ attempts to rein in high inflation by obstructing a vital transit route for seaborne cargoes of gas and oil from the Middle East to the global market, thus driving up oil prices.
Leading Arab producers like Saudi Arabia might reduce exports and reduce the world’s oil supply by 6–8 million barrels per day, which would drive up oil prices to $140–$157 per barrel.
The CS referenced a Financial Times report stating that rising worldwide prices are expected, with a potential price per barrel of USD 150.
“And I read an article recently in the Financial Times recently that prices are likely to go up to USD 150 per barrel,” he stated.
“We sincerely hope it does not reach that point, as that would mean our products reaching as high as Ksh. 300 per litre.”
The depreciation of the Kenyan shilling due to inflation and the US dollar’s stronghold on the oil market are two factors that are aggravating the situation and driving up fuel prices, according to CS Chirchir.
“Kenya is paying 200 USD per barrel for petroleum products while other countries are paying 300 USD Per litre,” stated CS Chirchir.
“We import products worth 500 million USD: 4 cargo diesel, 4 cargo petroleum, 1 cargo kerosene.”
CS Chirchir stated that to lessen the uncontrollably high cost of fuel, the government has inked memorandums with nations like Saudi Arabia and Abu Dhabi, who possess substantial amounts of the world’s oil reserves, as opposed to having to pay for the purchase of petroleum goods after each shipment to Mombasa.
