Government Warns of Possible Fuel Price Hike Ahead of August EPRA Review as Middle East Crisis Deepens
The warning comes as international crude oil prices continue to climb, raising fresh concerns over inflation, transport costs and the overall cost of living for millions of households already grappling with high commodity prices.
The Ministry of Foreign and Diaspora Affairs said the worsening security situation around some of the world’s busiest shipping routes poses a significant threat to Kenya’s energy imports and broader economic stability.
Middle East Tensions Raise Global Oil Supply Fears
The government’s concerns follow a sharp escalation of tensions involving Iran, the United States, and their regional allies, developments that have unsettled global energy markets.
The latest flashpoint emerged on July 20, when Yemen’s Iran-backed Houthi rebels announced a naval blockade targeting Saudi-linked shipping in the Red Sea, specifically around the strategic Bab al-Mandeb Strait, one of the world’s most important maritime trade corridors.
For months, commercial vessels operating in the region have faced attacks, security threats and rising insurance premiums, prompting several shipping companies to reroute cargo around southern Africa—a move that significantly increases transport costs and delivery times.
Mudavadi Warns of Inflationary Pressure
Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs Musalia Mudavadi warned that continued instability could have far-reaching consequences for Kenya’s economy.
“These new attacks and the threat to freedom of navigation in the Red Sea and Bab al-Mandab Strait could worsen the already dire situation by disrupting supply chains, particularly for oil and fertiliser, constraining international trade, and driving up maritime insurance and freight costs,” Mudavadi said.
He noted that increased freight charges eventually filter down to consumers through higher fuel prices and increased costs of imported goods.
According to the government, rising fuel costs would likely increase production expenses across multiple sectors, putting additional upward pressure on food prices, transport fares and essential commodities.
“The resulting increase in import and production costs is expected to heighten inflationary pressures in Kenya and the wider region,” Mudavadi added.
August EPRA Review in Focus
Attention is now turning to EPRA’s next monthly fuel price review, which will determine pump prices for August.
Under Kenya’s petroleum pricing formula, EPRA calculates retail fuel prices using the average landed cost of petroleum cargoes delivered up to the 10th day of each month.
This means shipments arriving over the coming days—while global oil prices remain elevated—will directly influence the regulator’s next pricing cycle.
Analysts warn that if international crude prices remain high throughout the review period, motorists could face another increase in fuel prices despite government interventions aimed at cushioning consumers.
Government Banks on Saudi Fuel Deal
To shield the country from severe price shocks, the government says it will continue relying on its government-to-government (G-to-G) fuel import agreement with Saudi Arabia.
Officials believe the agreement has played a critical role in cushioning the economy against extreme volatility witnessed in global oil markets over the past year.
Current Fuel Prices Remain Unchanged
Under the current pricing cycle running from June 14 to August 14, EPRA retained previous fuel prices.
Motorists in Nairobi are currently paying:
- Super Petrol: Ksh214.03 per litre
- Diesel: Ksh222.86 per litre
- Kerosene: Ksh191.38 per litre
However, sustained increases in international crude oil prices could make it difficult for those prices to remain unchanged during the next review.
Brent Crude Continues to Surge
International oil markets have responded sharply to developments in the Middle East.
By the end of the week, Brent crude had climbed by approximately 10 to 13 percent, rising from the high $80-per-barrel range to between $97 and $100 per barrel.
The increase has reignited fears of a broader global energy crisis, with economists warning that prolonged instability around major shipping lanes could prolong high fuel prices worldwide.
For Kenya, which imports all its refined petroleum products, sustained disruptions in global supply chains would likely translate into higher import costs, increased inflation and renewed pressure on household budgets.
With EPRA’s August review approaching, motorists, businesses and consumers alike are now closely watching global developments, hoping geopolitical tensions ease before higher international oil prices translate into steeper fuel costs at local filling stations.
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Government Warns of Possible Fuel Price Hike Ahead of August EPRA Review as Middle East Crisis Deepens
