Fuel Prices Set to Rise in Kenya Amid Middle East Crisis
Kenya is staring at a likely spike in fuel prices in the coming weeks, as the ripple effects of the escalating conflict in the Middle East begin to hit global oil markets.
According to National Treasury and Economic Planning Cabinet Secretary John Mbadi, the country will start feeling the pressure by mid-April, when newly imported fuel reflects higher global prices.
Why Prices Haven’t Increased Yet
For now, consumers have been shielded from the surge thanks to existing fuel stock that was procured before the conflict intensified.
Mbadi explained that the current pricing cycle, which runs from March 15 to April 14, will remain stable since the products being sold were delivered earlier and are not affected by the recent global price spikes.
This means Kenyans still have a short window before the impact hits pump prices.
Government Unveils Ksh17 Billion Cushion Plan
To prevent a sudden shock to consumers, the government plans to deploy approximately Ksh17 billion from the Petroleum Development Levy stabilisation fund.
The funds are intended to cushion consumers by moderating price increases over the next three months, although the relief will only be temporary.
Mbadi noted that while the government is ready to intervene, the final pricing decisions will still be announced by the Energy and Petroleum Regulatory Authority (EPRA).
Possible Changes to VAT on Fuel
In addition to the stabilisation fund, the government is considering restructuring how VAT is applied to fuel.
Instead of a percentage-based system, authorities are exploring a fixed VAT amount per litre to reduce the burden on consumers during periods of high global prices.
For example, if diesel prices were to rise by Ksh60 per litre, removing VAT could reduce the increase to about Ksh51, after which the stabilisation fund would help cushion the remaining cost.
Fuel Supply Still Stable — For Now
Despite rising global uncertainty, the government insists that Kenya’s fuel supply remains stable in the short term.
Current reserves stand at:
- Petrol: 16 days
- Diesel: 19 days
- Jet fuel and kerosene: 49 days
Mbadi revealed that Kenya’s government-to-government fuel import deal is helping secure supplies from alternative regions such as Europe and India, avoiding areas affected by the Middle East conflict.
Economic Ripple Effects Already Being Felt
Beyond fuel prices, the crisis is already affecting key sectors of Kenya’s economy.
The country has reportedly lost access to Gulf livestock export markets, leading to an estimated revenue loss of about Ksh250 billion per week.
Airlines and logistics companies are also facing increased operational costs due to longer routes and higher fuel consumption.
Pressure on the Shilling and Inflation Risks
The impact of rising fuel costs is expected to go beyond the pump.
Economists warn that:
- The Kenyan shilling could weaken as demand for dollars rises to pay for expensive fuel imports
- Inflation may increase due to higher transport and production costs
- Overall economic growth could slow down
These combined pressures could make the coming months economically challenging for both businesses and households.
What This Means for Kenyans
While the government’s intervention may delay the full impact, experts warn that higher fuel prices are almost inevitable.
For ordinary Kenyans, this could translate into:
- Increased transport fares
- Higher food prices
- Rising cost of goods and services
The next fuel pricing announcement by EPRA in mid-April will be a critical moment in determining just how severe the increase will be.