Kenyan consumers are staring at prolonged high fuel,
electricity and commodity prices after renewed confrontation between the US and
Iran reignited fears of fresh disruption to global supplies through the Strait
of Hormuz.
The latest escalation comes just days after global oil
prices had eased on hopes of a lasting peace agreement between Washington and
Tehran, raising expectations that motorists and businesses would finally see
lower fuel prices.
Instead, this week attacks on commercial tankers in
the Strait of Hormuz and retaliatory US strikes on Iranian military targets
have pushed crude prices higher again, threatening to keep the cost of living
elevated in Kenya.
United States launched fresh strikes after three
commercial vessels were attacked in the strategic waterway, targeting more than
80 Iranian military assets, including missile sites, drone facilities and
Islamic Revolutionary Guard Corps boats.
The Trump administration also revoked temporary
waivers that had allowed limited Iranian oil exports under a June 2026
memorandum of understanding, leaving the fragile truce hanging by a thread.
The Strait of Hormuz carries about one-fifth of the
world's oil, making any disruption an immediate concern for fuel-importing
countries such as Kenya.
After falling below $71 a barrel last week amid
optimism over peace talks, Brent crude has rebounded to about $76-$79 per
barrel following the latest exchange of strikes.
Earlier during the conflict, prices had surged to as
high as $120-$126 per barrel on fears of major supply disruptions.
The renewed price rally means relief at the pump for
Kenyan consumers is likely to remain elusive.
In the latest June-July fuel review by the Energy and
Petroleum Regulatory Authority (EPRA), Super Petrol is retailing at Sh214.03
per litre in Nairobi, Diesel at Sh222.86 and Kerosene at Sh191.38, keeping
transport and production costs high across the economy.
According to the Central Bank of Kenya (CBK), the
Middle East conflict has disrupted global supply chains, increased
transportation costs and fueled inflation while slowing global economic growth.
Kenya's inflation rose to 6.7 per cent in May from 5.6
per cent in April before easing slightly to 6.4 per cent in June, although
households continue to grapple with high transport and food costs.
CBK Governor Kamau Thugge said higher fuel prices have
continued to feed into transport costs.
"Core inflation rose to 3.2 per cent in May from
2.8 per cent in April, mainly driven by higher inflation for transport items
arising from higher fuel prices," Thugge said in the latest Monetary
Policy Committee report.
Shipping players warn that uncertainty around the
Strait of Hormuz remains a threat to global
supply chains.
Kenya Ships Agents Association CEO Elijah Mbaru said
repeated closures and sudden reopenings of the waterway are creating costly
uncertainty for importers.
"The volatile situation is throwing shipping
schedules into disarray, stranding hundreds of vessels, and severely driving up
freight costs and insurance premiums for Kenyan importers," he said.
Manufacturers are also bracing for higher production
costs.
Kenya Association of Manufacturers CEO Tobias Alando
said local industries rely heavily on imported raw materials, including
aluminium, industrial chemicals, plastics, paper, glass and other specialized
manufacturing inputs, many of which either originate from or pass through the
Gulf region.
"As shipping lines reviewed routes, vessels
experienced delays, security protocols tightened and insurance costs increased,
manufacturers have found themselves navigating an increasingly uncertain
operating environment," Alando said.
EPRA has maintained that Kenyan pump prices reflect
imported fuel cargoes purchased 30 to 45 days earlier, meaning reductions in
global crude prices take time to reach consumers.
With oil prices climbing once more, hopes of cheaper
fuel are slowly diminishing.
The International Monetary Fund has already lowered
Kenya's 2026 economic growth forecast to 4.5 per cent from 4.9 per cent, citing
high energy costs, inflationary pressures linked to the Middle East conflict
and weaker global demand.
Kenya’s exports mainly tea, coffee and other
agricultural produces have been affected with longer delivery time and high
shipping costs also affecting raw material imports and other commodities, with
local industries also hit.
According to Trade CS Lee Kinyanjui, the crisis
demonstrates how global geopolitical tensions quickly translate into higher
costs for economies far from the conflict.
"In a world increasingly dependent on one
another, disruption to trade and travel can have far-reaching consequences,
even in faraway lands. While we hope for a speedy resumption to normalcy, the
reality of geopolitics remains unpredictable," he said.
