Kenya Braces for Fuel Price Hike as Global Oil Market Pressures Intensify

Fuel prices in Kenya are set to increase in May, driven by volatility in global oil markets linked to the ongoing Middle East conflict, even as the government moved to calm fears over the country's economic stability.

Treasury Cabinet Secretary John Mbadi told the National Assembly's Finance and National Planning Committee that while the country faces exposure to global shocks, there is no cause for alarm as mitigation measures are already in place.

Mbadi said the anticipated rise in pump prices will largely reflect higher import costs expected in May and June, following disruptions in global energy supply chains, including the closure of the Strait of Hormuz a critical oil transit route.

"The imports for May and June are likely to reflect higher global prices, posing a risk of increases in domestic pump prices with attendant inflationary pressures," he said.

However, the CS assured lawmakers that Kenya's government-to-government (G-G) oil supply arrangement with key Middle East suppliers would cushion consumers from extreme price spikes.

Under the deal, Kenya sources its petroleum products from firms including Aramco Trading Fujairah FZE, ADNOC Global Trading Ltd and Emirates National Oil Company, which are obligated to supply fuel regardless of source disruptions.

Despite the looming price increases, Mbadi maintained that the economy remains resilient, with growth projected at 5.3 per cent in 2026 and 2027, up from 5.0 per cent in 2025.

He revealed that the government has constituted an inter-ministerial team to monitor the evolving situation and recommend interventions to shield the economy from external shocks.

"As a responsible government, we are taking a whole-of-government approach to assess various scenarios and determine appropriate responses," he said.

The CS noted that Kenya currently holds adequate fuel stocks, with reserves of super petrol, diesel and jet fuel sufficient to last between 16 and 49 days, alongside additional shipments expected in April.

Still, he cautioned that sustained conflict in the Middle East could further strain supply chains, increase freight and insurance costs, and exert pressure on inflation.

Mbadi warned oil marketers against hoarding fuel in anticipation of higher prices, saying the government would take action against speculative practices.

In the event of prolonged market instability, he said the government is considering tax adjustments, including a shift to an ad valorem tax system to ease the burden on consumers.

Lawmakers, led by Committee Chairperson Kuria Kimani, pressed the Treasury on the need for early interventions, drawing parallels with tax relief measures implemented during the Covid-19 pandemic.

"Hon. CS we reduced taxes during the Covid Pandemic to cushion the people from the price surges experienced then. How do we ensure that we can make an intervention earlier rather than later?", Kimani asked.

Other MPs, including Homabay Town MP Peter Kaluma, urged the government to accelerate investment in e-mobility to reduce dependence on imported fuel.

"The use of electric motor vehicles. especially for public service. Thats an intervention ...Ethiopia is looking at that direction, not because of the current situation, but as government policy which might ease pressure on such occurrences,"Kaluma stated.

The committee vice chair and also Kitui Rural MP David Mboni called for diversification of oil import sources, including tapping into African markets and Turkana oil.

"As a country, have you considered importing fuel from other African countries, Nigeria, and which are producing fuel, and which, the transit of that fuel, does not go through the strait of Hormuz ?"he posed.

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