Reasons for Decline in Global Oil Prices – CBK
Reasons for Decline in Global Oil Prices – CBK
Ahead of the review of Kenya’s pump prices, the Central Bank of Kenya (CBK) has provided an explanation of the most recent trend in the global oil market, which has seen the commodity’s prices fall to an all-time low.
A decline in demand from two major oil importers was the reason behind the price decline, according to CBK’s weekly briefing on the state of the global economy and the nation’s finances.
The report states that China and the US saw a decline in demand. “International oil prices declined during the week ending December 7, reflecting weak demand in the US and China, and increased oil output from the U.S,” according to a portion of the study.
“Murban oil price declined to USD 75.18 (Ksh11,641) per barrel on December 7 from USD 85.51 (13,240) per barrel on November 30.
On the other hand, the drop in demand in the US has been occasioned by the increase in the production of oil in parts of the country.
China’s decreased demand, on the other hand, was attributed to slow economic growth leading to an oversupply for other countries.
In the meanwhile, new pump rates for December through January are anticipated to be announced by the Energy and Petroleum Regulatory Authority (EPRA). Whether the latest worldwide market trend will be reflected in EPRA’s estimates is still up in the air.
One of the things that is typically taken into account when making estimates is the price of buying the oil.
Notably, President William Ruto pledged a large price reduction this month while on a trip of Kirinyaga County on November 18.
He asserted that the government’s actions, particularly the G to G contract, would be the cause of the price decline.
“As you can see, we are beginning to lower the cost of petrol. There will be a considerably larger price reduction next month. Until we reach a sustainable price, that will continue to be the case in January as well,” he said at the time.
