Decline in Global Oil Prices Ahead of EPRA Review
Decline in Global Oil Prices Ahead of EPRA Review
A recent report released by the Central Bank of Kenya (CBK) indicates a decrease in worldwide oil prices prior to the Energy and Petroleum Regulatory Authority’s (EPRA) January 14 review of pump pricing.
CBK said in its weekly analysis of the world economy that the US market’s excess supply was to blame for the price drop.
With the surplus supply in the US, the demand for the other markets was not as high, leading to the drop.
“International oil prices declined during the week ending January 4, following an inventory build-up in the US. Murban oil prices declined to USD 78.83 per barrel on January 4 compared to USD 79.55 on December 28,” read the report in part.
However, hopes of another fuel price drop could prove difficult given that the dollar has continued to dominate the Shilling. Just in one week, the Shilling shed against the greenbuck by over Ksh1.
“The Kenya Shilling remained relatively stable against major international and regional currencies during the week ending January 4. It exchanged at KSh 157.39 per US dollar on January 4, compared to KSh 156.09 per US dollar on December 28,” read the statement in part.
Given that oil marketers import fuel in dollars, the costs used in the purchase may remain high making pump prices to remain elevated.
Notably, EPRA also uses parallel rates than those issued by the CBK. The rates used for the pump calculations by EPRA are usually higher.
Nonetheless, the government could opt for the fuel stabilisation programme or subsidies as was witnessed during the December review.
The prices of diesel and super petrol were subsidised to cushion motorists despite a drop in global oil prices.
The current pump price of Ksh212.36 is the result of a Ksh5 reduction in petrol prices in December.
The price of kerosene and diesel were lowered by Ksh4.01 and Ksh2, respectively. In the meantime, President William Ruto stated in November 2023 that Kenyans would start to benefit from the government-to-government oil contract by promising them an additional drop in January.
“As you can see, we are beginning to lower the cost of petrol. December 2023 is the next month when the price will drop even further.
That would be the case until we reach a sustainable price in January 2024, Ruto said on November 18 at a rally in Kirinyaga County.