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Expect Further Increase in Fuel Prices as Oil Producers Cut Oil Export

Expect Further Increase in Fuel Prices as Oil Producers Cut Oil Export

Expect Further Increase in Fuel Prices as Oil Producers Cut Oil Export

NOTE

  • Oil-producing countries under the Opec+ umbrella announced they will reduce the export of petroleum products by two million barrels per day
  • The move was aimed at reducing fuel prices back to $100 (KSh 12,000) per barrel last recorded in July 2022
  • But the move ignited fears of disruption in the supply chain that could lead to unnecessary shortage, further rising prices

The prices of petroleum products could further increase as oil-producing countries cut export.

The move is expected to disrupt supply to net-importing countries like Kenya, which was hoping for a reduction in pump prices.

Ruto scraps fuel subsidy

President William Ruto has scrapped off the subsidy when he took over the office in September 2022.

Ruto said the subsidy distorts the market, hoping that increasing global supply will see the prices rescind to normal.

“In addition to being very costly, consumption subsidy interventions are prone to abuse, they distort markets and create uncertainty,” said Ruto during his inauguration on September 13.

But Opec+ member countries, including Saudi Arabia and Russia, on Wednesday, October 5, agreed to reduce supply by two million barrels daily.

Prices of petroleum products

According to BBC, the move was reached at to stabilise fuel prices that have been falling as supply gained momentum.

The countries said the plan will petrol prices back to $100 (KSh 12,000) per barrel since July 2022.

“The drop in fuel prices might not be as significant as we expected before the move by Opec+. The hope that the drop in global prices and increase in supply have been dimmed by this decision,” said economist Ken Gichinga as reported by

EPRA increase pump prices

In September 2022, Energy and Petroleum Regulatory Authority (EPRA) revised pump prices up by more than KSh 20

A litre of petrol currently retails at a record high of KSh 179.30, a litre of diesel at KSh 165, and a litre of kerosene at KSh 147.94 in Nairobi.

These prices could further increase following Opec’s announcement as shortage fears mount due to reduced supply.

Fuel from Russia

In September 2022, President  Ruto mooted buying fuel from Russia as part of his plans to cushion Kenyans from high fuel prices.

The head of state said Kenya is open to all options available to cut down the cost of petroleum products.

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