Kenyans are staring at a fuel shortage as OPEC nations reduce daily output

Kenyans queue to buy fuel on April 7, 2022. Kenyan consumers are facing fresh fuel shortages as some major oil marketing companies in Nairobi exhausted their stocks. PHOTO | FILE | NMG

NAIROBI - Kenya is staring at an increase in fuel prices in the coming weeks after OPEC states which are the large exporters reduced their exploration.

Media report indicates that oil prices have surged after several of the world’s largest exporters announced surprise cuts in production pushing up the price of Brent crude oil above $84 a barrel after jumping by almost 6 percent.

The RAC motoring club, however, stated that it does not anticipate a jump in gasoline prices unless the higher oil price is maintained for a number of days.

Brent crude prices rose after Saudi Arabia, Iraq, and several Gulf states said earlier in the week that they were cutting output by more than one million barrels of oil a day.

According to a US National Security Council spokesperson “We don’t think cuts are advisable at this moment given market uncertainty - and we’ve made that clear,”.

Additionally, Russia announced that it would continue to reduce 500,000 barrels per day through the end of the year.

The further depreciation of the shilling this month will exert more pressure on the exchange rate and make imports even more expensive for domestic consumers.

Since the value of the Kenyan shilling has fallen from Sh125 over a month ago to over Sh132 per US dollar as of Thursday, an increase in global costs will likely translate to increased landing costs which are eventually passed to consumers.

Fuel prices in Kenya had remained unchanged since the review in mid-November last year.

Energy and Petroleum Cabinet Secretary Davis Chirchir hinting late February that the prices will start to ease around April or May as the prices in the international market continue to drop.

However, if the move by exporters persists it will dim any hopes of a near future drop in fuel prices in the country.

Already Kenyans have been grappling with high fuel prices after the energy regulator raised the cap for super petrol by Ksh2 ($0.015) to Sh179 ($1.38) per liter in the last review.

GAROWE ONLINE