Hope for cheaper fuel for Kenyans as global prices fall

Fuel prices could come down sooner than expected owing to easing pressures in the international market, a development that will offer much-needed relief for motorists, producers, and households.

On Friday, the Energy and Petroleum ministry said it was looking at a possible drop in prices at the pump as global market pressures that have driven the cost of fuel higher begin to ease.

Energy CS Opiyo Wandayi told journalists that “changing demand and supply patterns across global markets are showing early signs of a possible drop in fuel prices.”

Wandayi, whose docket has been under intense public scrutiny due to rising fuel prices, said that while the global energy market remains volatile, the trend is encouraging and could soon translate into lower fuel costs.

“While the situation remains fluid and unpredictable, the direction is encouraging. In the fullness of time, as global conditions stabilise, Kenyans can expect the benefits progressively.”

On Saturday, the price of crude posted its biggest one-month decline in six years, delivering some relief to consumers at the pump and some optimism to investors hoping for an end to high prices.

News of a possible ceasefire between the US and Iran, subject to President Donald Trump's approval, saw the global Brent oil benchmark prices fall nearly 20 per cent in May, the biggest monthly drop since 2020.

It drove the price of a barrel of Brent crude down to a low of $93.4 (Sh12,076) from an earlier high of $98 9 (Sh12,671), before rebounding to about $94 (Sh12,154).

Global fuel prices surged to multi-year and, in some regions, all-time highs as the war in Iran, which started in early 2026, severely restricted oil traffic through the Strait of Hormuz.

The conflict led to the restriction or closure of nearly all traffic through this vital chokepoint, which accounts for roughly 20-25 per cent of the world's seaborne oil shipments.

The supply glitch caused panic in the global economy, with various institutions led by the International Monetary Fund (IMF) warning about a global recession tied to the war in Iran.

In its World Economic Outlook, the IMF warned that a prolonged conflict could slash global economic growth to below two per cent, a threshold historically indicating a global recession.

Locally, Kenya Private Sector Alliance (Kepsa) and the Kenya Association of Manufacturers (KAM) warned that over two million people risk sliding into poverty as the cost of living rises due to high fuel prices.

In Kenya, a surge in fuel prices sparked deadly protests that saw at least four people shot dead, goods worth millions of shillings destroyed and road transport disrupted.

The protests came just a day after the Energy and Petroleum Regulatory Authority (EPRA) pushed up retail prices of a litre of super petrol by Sh16.65 and diesel by Sh46.29 for the May 14 to June 14 cycle.

This is despite various government interventions, including slashing Value Added Tax (VAT) on fuel by half and cushioning consumers through the Petroleum Development Levy (PDL) Fund.

The protests saw the government slash the price of a litre of diesel by Sh10 and raise kerosene prices to avert fuel adulteration.

Two weeks ago, President William Ruto promised to cut diesel prices further by Sh10 in the upcoming monthly price revision following high-level consultations with public transport stakeholders.

The head of state said that the intervention is intended to lower transport costs and cushion Kenyans against the impact of a global fuel crisis linked to instability in the Middle East.

Ruto defended his administration’s response to the fuel crisis, attributing the price hikes to disruptions in global oil supply chains caused by escalating tensions involving Iran and insecurity along the Strait of Hormuz.

He said the government has injected Sh13.74 billion through the Petroleum Development Fund over the last two fuel pricing cycles and further reduced VAT on petroleum products from 16 per cent to eight per cent, sacrificing an estimated Sh14.43 billion in revenue.

Without the subsidies and tax adjustments, he said, diesel prices would currently stand at Sh277.75 per litre instead of the prevailing Sh232.86.

Various players in the transport and production sectors have welcomed news of a possible fall in fuel prices, terming it timely.

Several Public Service Vehicle (PSV) operators across the country called on the government to walk the talk, saying that they have recorded huge losses in the past months.

“Wandayi’s statement has inspired hope amongst our members who are recording huge losses. We just hope that the cut will be significant enough to help reverse the current situation,’’ Tom Kibe, an official of Likana Sacco, told the Star.

His sentiments were echoed by Jerome Wakoli, chairperson of the Boda Boda Association, Westlands branch.

“Our members are suffering. I hope Wandayi is not playing politics with this sensitive matter. We expect fuel prices to drop progressively by at least Sh20 per cycle. We will not accept the usual Sh4 and loaded statements,’’ he said.

“The pain is real. I used to make at least Sh4,000 per day, but that has sunk to just Sh1,500 and sometimes zero due to high fuel prices. I have since cut my operations to three days a week to avert more losses,’’ Benjamin Mureithi, a taxi operator, told the Star.

“I hope that a litre of super petrol will drop below Sh200 in the upcoming price revision cycle,’’ he said.

The Institute of Certified Public Accountants of Kenya (ICPAK) is hoping for relief, with chairperson Elizabeth Kalunda saying that fuel is not merely a commodity consumed at the pump.

“It is a strategic enabler of productivity, trade, mobility, food security, manufacturing, and public service deliverables and when its price rises sharply, every sector of the economy and every household feels the strain,’’ she said.

Accountants are recommending a Strategic Petroleum Reserve Act to mandate a minimum 90-day domestic reserve, funded through a transparent, auditable levy.

“A price-smoothing mechanism of the kind operating in Chile, Malaysia, and India should prevent global volatility from being transmitted immediately and in full to consumers.”

The Kenya Association of Manufacturers, on the other hand, wants the government to review taxes, which make up about 46 per cent of pump prices, warning that elevated transport and production costs will trigger inflation across essential sectors.

Peris Wamae, a fruit and vegetable vendor in Ngara, called on the government to review policies around fuel and power prices, saying that a price cut is needed urgently.

Even so, opposition leaders have criticised Wandayi, calling his assurances "hollow".

Led by Wiper leader Kalonzo Musyoka, they have demanded both lower fuel prices and Wandayi's resignation, pointing out that current pump prices still pose a massive burden on struggling households.

Kalonzo claimed the current fuel crisis in the country is artificial and is meant to benefit top leaders in President William Ruto’s government.

Last week, National Treasury CS John Mbadi accused opposition figures and critics of exploiting the recent surge in pump prices to incite public protests, describing the demonstrations as unnecessary and misplaced.

Addressing the Bunge La Mwananchi forum at Nairobi’s Jevanjee Gardens, Mbadi highlighted measures taken by the government to cushion households from high fuel prices stemming from the war crisis in the Middle East.

He defended the G-to-G arrangement, saying it has helped to stabilise the Kenyan shilling, hence keeping fuel prices lower.

"If you don't have a G-to-G arrangement where payment is deferred even by three months, there will be strain on our shilling because the demand for the dollar will be high,” Mbadi warned.

"Many politicians have localised this thing as if it were a Kenyan problem alone. I want to tell you that the problem of fuel is not a Kenyan problem. This is a global problem. No fuel is coming from the Middle East to many parts of the world, and that is why the supply chain has been disrupted."

He said that although the crisis has put a strain on the country’s overall economy, things will get better as the government reviews various policies while hoping that the crisis in the Middle East de-escalates.

Kenya's inflation rate rose to 6.7 per cent in May, up from 5.6 per cent in April.

The Kenya National Bureau of Statistics (KNBS) reported that this increase was primarily driven by higher prices for transport (16.5 per cent), food and non-alcoholic beverages (9.4 per cent), and fuel.

Economists are not surprised by the high inflation recorded in May, saying that it is a global phenomenon.

“This is not unique to Kenya. Rising energy and fuel costs drive inflation through several interconnected channels. Although the government needs to re-examine fuel taxes, it has done a commendable job of ensuring supply. Several countries have been forced to ration,’’ Dan Mweresa, an economist at a local consulting firm, said.