Kenyans could be headed for some relief at the fuel station after the Central Bank of Kenya (CBK) reported a drop in global oil prices ahead of the next fuel price review by the Energy and Petroleum Regulatory Authority (EPRA).
In its weekly market bulletin released on Friday, CBK said the price of Murban crude oil fell during the week ending June 4, a development that could influence local fuel prices when EPRA announces new rates next week.
In addition, the bank noted that Murban crude was trading at 87.38 US dollars (around KSh11,315) per barrel, compared to 88.48 dollars (around KSh11,457) registered the previous week.
As explained by CBK, the fall in prices was attributed to increasing hope in negotiations being conducted between the two countries, easing fears of a potential supply crisis in the oil industry globally.
The development came days before EPRA’s planned review of the country’s fuel prices due on June 14. The new prices will be effective from June 15 to July 14.
Fuel prices in the country have continued to attract controversy over the past months as a result of increased prices, resulting in high fares and inflation in basic goods.
However, there were also speculations that prices might be reduced following statements made by Energy CS Opiyo Wandayi regarding falling diesel prices in the next review.
While global oil prices are the main determinant of prices in Kenya, other aspects considered include taxes and duties, freight charges, and exchange rates between the Kenyan shilling and US dollar.
CBK noted that the shilling remained stable during the review period, exchanging at KSh129.52 against the dollar on June 4, the same level recorded the previous week. A stable currency helps keep fuel import costs in check since petroleum products are purchased in dollars.
Even with the drop in oil prices, however, the bank said inflation continued to rise in May. Overall inflation increased to 6.7 per cent from 5.6 per cent in April, largely driven by higher energy and transport costs linked to previous increases in global oil prices.
The upcoming EPRA review is therefore expected to attract keen interest from Kenyans hoping for lower fuel costs after months of pressure on household and business budgets.
