Kenyans hoping for an immediate drop in fuel prices may have to wait a little longer, with Energy Cabinet Secretary Opiyo Wandayi saying any benefits from improved stability in the Middle East will take time to reach local consumers.
Speaking during an interview on Monday, June 15, Wandayi explained that while calm in the region could help lower global oil prices, Kenya’s fuel pricing system means the impact is not felt instantly at local filling stations.
According to the CS, the country relies on international benchmark fuel prices from the previous month when determining local pump prices.
As a result, changes in the global market are usually reflected in Kenya several weeks later.
“When the situation in the Middle East stabilises and there is a resumption of normal supply along the Strait of Hormuz, we will be able to see the benefits come down to consumers, but it cannot be instant,” Wandayi said.
He noted that fuel imported and discharged into the country in a particular month is priced based on international benchmark rates from the preceding month.
This means that even if global oil prices begin falling immediately, Kenyans may not see the full effect at the pump right away.
“Fuel that is discharged in month X is priced against international benchmark prices of X minus one. Therefore, any benefit arising from stability will come to consumers progressively,” he explained.
The CS said that if stability in the Middle East is sustained and the Strait of Hormuz remains open, consumers could begin experiencing more noticeable reductions in fuel prices from around August.
The Strait of Hormuz is one of the world’s busiest oil shipping routes and handles a significant share of global oil supplies. Any disruption along the route often affects international fuel prices.
Wandayi’s remarks come amid reports of improved relations between Iran and the United States and discussions around the reopening of the strategic shipping channel, developments that could ease pressure on global energy markets.
However, the CS noted that another factor affecting local prices is the government’s fuel stabilisation measures.
According to him, the prices currently being paid by motorists are already cushioned through a subsidy mechanism, meaning future reductions will be calculated from the actual market price rather than the subsidised rate.
“The prices we are currently offering at the pump stations are a result of fuel subsidy. Any reduction will have to come from the actual price, not the subsidised prices,” he said.
His comments come just days after the Energy and Petroleum Regulatory Authority (EPRA) announced lower fuel prices for the June-July pricing cycle.
Under the latest review, diesel prices dropped by Ksh10 per litre to retail at Ksh222.86, while petrol prices were reduced by Ksh0.22 to Ksh214.03 per litre.
While the latest reduction brought some relief to consumers, many Kenyans continue to closely watch global developments in the hope that further stability in international oil markets will translate into lower fuel costs in the coming months.
