- Prices have been rising for seven consecutive days on the back of the energy crisis in Europe.
- In Kenya, the cost of super petrol went up by Sh7.58, diesel Sh7.94 and Sh12.97 for kerosene.
Oil prices climbed above $80 a barrel on Wednesday, hitting their highest level in three years as the pound slumped.
Brent crude, the international benchmark, rose to as much as $80.69 on the day, the most since October 2018.
The high global price of crude oil is likely to worsen matters in Kenya where a litre of Super Petrol is currently trading at almost Sh135 per litre, sparking a public outcry.
A fortnight ago, the Energy and Petroleum Regulatory Authority (EPRA) announced new fuel prices for the month that pushed up the cost of a litre of super petrol by Sh7.58, diesel Sh7.94 and Sh12.97 for kerosene.
Currently, Super Petrol, Diesel, and Kerosene are retailing at Sh134.72, Sh115.60, and Sh110.82 per litre respectively in Nairobi.
Although the landing cost of crude oil is a factor in local fuel prices, over 50 per cent of fuel cost is tax-based.
Prices have been rising for seven consecutive days on the back of the energy crisis in Europe.
Analysts believe that oil prices will continue to rise amid surging demand and tight supplies.
Investment bank Goldman Sachs said Brent could hit $90 per barrel by the end of the year, warning that rising input costs, higher gas prices and weaker growth were likely to weigh on European corporate profit growth for 2021.
"While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts," Goldman said.
Caught short by the demand rebound, members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have had difficulty raising output as underinvestment or maintenance delays persist from the pandemic.
"The rise of oil prices is continuing beyond what even most bullish traders would dream just months ago, and Brent hurtling toward the threshold of $80 per barrel is reflective of the extraordinarily tight crude market," said Louise Dickson, senior oil markets analyst at Rystad Energy.
"U.S. supply constraints will continue to provide upside to oil prices, as Ida-related outages will still affect U.S. supply in the first quarter of 2022."
Global oil demand is expected to reach pre-pandemic levels by early next year as the economy recovers, although spare refining capacity could weigh on the outlook, producers and traders said at an industry conference.
Global demand is seen rising to 100 million barrels per day by the end of 2021 or in the first quarter of 2022, Hess Corp president Greg Hill said.
The world consumed 99.7 million bpd of oil in 2019, according to the IEA, before the Covid-19 pandemic hammered economic activities and fuel demand.
In India, oil imports hit a three-month peak in August, rebounding from nearly one-year lows touched in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.
Abu Dhabi National Oil Company has planned to supply full volumes of all crude grades to term customers in Asia in December, several sources with knowledge of the matter said on Monday.
This will be the first time since the oil price crash in the second quarter of last year when the Covid-19 pandemic ravaged demand that ADNOC did not implement any supply cut, they said.
INCREASED SUPPLY
The rising global crude price saw oil-producing countries shelve a plan to extend supply cut to 2022as proposed by Saudi Arabia and Russia.
The plan was further derailed by a dispute between Saudi Arabia and the United Arab Emirates in July.
The unusually public dispute between the close allies had raised fears about the stability of the "Opec +" cartel, which controls more than 50per cent of the world's oil supplies.
Last month, oil-producing nations agreed to increase their output, with the aim of reducing prices and easing pressure on the world economy.
The move should have an impact on petrol prices at the pump, which have also rocketed.
The price of Brent crude oil is up to 43 per cent and threatens to rise to almost $82 by next week.
Last year, Opec and its partners cut production by a record 10 million barrels per day amid a pandemic-induced slump in demand and collapsing prices.
However, this year the price of oil has surged as economies have reopened, contributing to rising inflation in some countries and threatening to put the brakes on the global recovery.