Eyes on Epra as global oil prices hit 6-month low
Global oil prices hit 6-month low. The fall in crude oil prices gives hope of a likely relief at the pump in February next year.
What you need to know:
- The fall in crude oil prices gives hope of a likely relief at the pump in February next year.
- The sluggish demand in US and China due to slowed economic activities said to be behind falling crude oil prices.
A drop in global prices to a six-month low has turned the spotlight on the Energy and Petroleum Regulatory Authority (Epra) amid hope of cost relief for consumers early next year.
Murban crude prices—the benchmark used by Epra for its monthly pricing cycles—yesterday remained at $69.6 (Sh10,676.28), their lowest since July despite gaining some slight ground from the previous day.
The Murban prices are the lowest in six months, with the closest being $69.15 (Sh10,607.73) per barrel posted in June.
The fall gives hope of a likely relief at the pump in February next year amid sky-high fuel prices, with a litre of super petrol and diesel retailing at Sh217.36 and Sh203.47 respectively in Nairobi.
A sluggish demand in the United States and China due to slowed economic activities has been cited as the reason behind the falling crude prices globally.
The continued drop comes weeks after Energy Cabinet Secretary Davies Chirchir warned Kenyans to brace for tougher days ahead amid the escalation of the Israel-Hamas war.
Energy and Petroleum Regulatory Authority (Epra) boss Daniel Kiptoo.
“We can’t do much on international pricing of petroleum. I read an article that international (crude) prices could go to $150 (per barrel) because of the Israel-Hamas war, which would literally mean our products going to a high of Sh300 per litre at the pump. We hope it doesn't get there,” Mr Chirchir had warned last month.
Supply cuts announced by the oil-producing countries under the Organisation of the Petroleum Exporting Countries (Opec) have further fuelled the drop.
Oil prices have fallen by about 10 percent since the OPEC and allies, together called OPEC+, announced a combined 2.2 million barrels per day voluntary output cuts for the first quarter next year.
Kenya’s pump pricing schedule lags the global trends by two months, meaning that the current drop in crude prices can only be felt locally from February, at the earliest.
Global crude prices remained on a steady climb from July and peaked at $96.9(Sh14,863.81) per barrel posted in September, before starting a decline at the back of the slowing demand in the world’s two biggest economies.
Local pump prices have since September remained above the Sh200 mark per litre of super petrol, diesel, and kerosene since July, on a combination of the doubling of Value Added Tax to 16 per cent and the global rally in crude prices.
Fuel prices shot to historic highs in the monthly pricing cycle to November 14, with a litre of super petrol and diesel going for Sh217.36 and Sh205.47 respectively in Nairobi.
The high prices have since forced the government to reinstate the fuel stabilisation fund to prevent prices from breaching the Sh220-mark.
For example, in the current pricing that lapses on Thursday next week, a litre of super petrol would be going for Sh229.37 while diesel would be retailing at Sh223.29.
High pump prices significantly drive up the cost of living given that the Kenyan economy is diesel-driven.
Manufacturers of goods, electricity generators, farmers, and service providers factor in the higher costs of fuel when pricing their goods and services.
Inflation — a measure of the cost of living over 12 months — dropped to 6.8 per cent last month from 6.9 per cent in October.
