Kenyans are starring at another spike in fuel prices in the coming months after international agencies lifted the lid on diminishing oil inventories worldwide.
According to Reuters, an international media outlet, the diminishing inventories are creating an imbalance in the law of supply and demand.
In some states, the demand for crude oil has already surpassed supply, creating a shortage.
Economists project that the reduction in inventories will see the price of crude oil increase from Ksh11,978 per barrel to Ksh12,834 in the coming months.
The shortage was caused by Saudi Arabia's decision to cut its oil production significantly. This is instructive since the Gulf country is the leader of the Organization of the Petroleum Exporting Countries (OPEC).
At the beginning of July, both Saudi Arabia and Russia announced plans to cut their oil exports with the aim of improving prices fetched per barrel.
Saudi Arabia in particular noted that it would cut up to 1 million barrels per day for the months of July and August reducing the barrels produced per day to 9 million.
Russia, on the other hand, was on course to slash over 500,000 barrels per day in the month of August.
The decision came just a month after fuel in Kenya recorded a steady spike in prices after President William Ruto increased the Value Added Tax (VAT) on fuel from 8 per cent to 16 per cent.
On July 1, Super Petrol rose by Ksh13.49 to retail at Ksh195.53 per litre while Diesel increased by Ksh12.39 to retail at Ksh179.67. Kerosene, on the other hand, retails at Ksh173.44.
If the prices shoot up, the Energy and Petroleum Regulatory Authority (EPRA) is likely to review its own pricing which may result in prices crossing the Ksh200 mark.
Commuters who use public transport are already feeling the pinch with continuously rising matatu fares. The Kenya National Bureau of Statistics (KNBS) reported that between July 2022 and July 2023, fares surged by 40 per cent.
In April, EPRA could not commit on the likelihood of oil prices decreasing after President William Ruto's government sealed an oil deal with the Gulf states.
"As to whether we will see a reprieve in terms of cost. I want to state that because this is a global retailing commodity we don't have control over that. I want to assure you that we will continue to work on efficiencies to ensure that Kenyans get a reprieve going forward," EPRA Director General Daniel Kiptoo told a Parliamentary committee at the time.
"If there's a gain, we as a regulator will be able to pass the benefits to the common mwananchi. In the event there is a loss, it will be passed through to the consumer."
Since then, prices have ticked upwards.
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