Ahead of the anticipated fuel price review on Tuesday, May 14, there have been new developments in the global oil market and the exchange rate.
As detailed in the Central Bank of Kenya (CBK) weekly report dated May 9, global oil prices declined for the second consecutive week.
The drop was occasioned by a recent push for a cease-fire in Gaza by various diplomatic organisations.
Various countries and diplomatic corps had expressed fears over the risks that the Israel-Palestine conflict posed to the Middle East, a major oil exporter around the globe.
On the other hand, it was noted that the supply and demand for oil prices also stabilised.
"International oil prices declined during the week ending May 2, supported by a renewed diplomatic push in the Middle East to secure a cease-fire in Gaza. Murban oil prices dropped to USD 84.64 per barrel on May 2 compared to USD 88.74 per barrel on April 25.
"International oil prices declined during the week ending May 8, supported by balanced oil demand and supply, and build-up of oil inventories amid increased geopolitical uncertainties. Murban oil prices dropped to USD 83.28 per barrel on May 8 from USD 88.64 per barrel on May 2," read the report in part.
Notably, the two-week consecutive drop came shortly after a sharp rise in the third week of April owing to the fears of the Israel-Palestine conflict spillover and a tight supply-demand balance.
Exchange Rate
On the other hand, after days of weakening, the shilling stabilised and gained against the dollar.
As of May 9, the dollar exchanged at Ksh131.25 in comparison with Ksh133.20 for the week that ended on May 2.
Below is the movement of the exchange rate for the last five days;
What to expect
With the mixed movements of the exchange rate and the global oil prices, little movement is expected in fuel prices to be announced next week.
However, President William Ruto had expressed that the oil prices would be dropping from January owing to various government initiatives that stabilised the dollar.
For instance, during the February review, Diesel prices dropped by Ksh10 while Super Petrol dropped by Ksh5.
"Oil prices as you have seen have dropped with Ksh10 today because we are making the right decisions not the right decisions and Kenya is going to go forward. This nation will change for the better," Ruto stated during a church service.
On the other hand, the government could also opt to adopt a subsidy programme inorder to cushion Kenyans given the recent floods which has affected households across the country.
