The Central Bank of Kenya (CBK) has reported an increase in global oil prices ahead of the fuel review scheduled for Thursday, March 24.
In its weekly economic review, the CBK highlighted that fuel prices increased in the first week of March owing to increased demand in the international market.
Particularly, it was noted that supply in the US had also witnessed a decline, hence the recent surge in demand.
On the other hand, China also recorded a surge in demand. According to reports by the General Administration of Customs, China's oil imports have increased by 5.1 per cent in the first two months of 2024.
"International oil prices increased during the week ending March 7 supported by increased oil demand and drawdown of US oil inventories. Murban oil price increased to USD 83.25 per barrel on March 7 compared to USD 82.39 per barrel on February 29," read the report in part.
With regard to the shilling and the dollar, the former has maintained its stability after recording momentum gains against the dollar in February.
Currently, the dollar is trading at an average of Ksh143.
The stability of the shilling could prove beneficial to Kenyans, given that oil marketers use the dollar to import fuel products. Therefore, a stronger shilling could ease the pressures on any potential spike in prices.
"The Kenya Shilling remained stable against major international and regional currencies during the week ending March 7. It exchanged at Ksh142.07 per US dollar on March 7, compared to Ksh143.59 per US dollar on February 29," the CBK report highlighted in part.
In its February review, EPRA reduced fuel prices by only Ksh1 despite drastic movements in the exchange rate.
Notably, the Energy Petroleum and Regulatory Authority (EPRA) noted that the Ksh1 drop was achieved after applying subsidies to cushion Kenyans.
"The price of Diesel has been cross-subsidized with that of Super Petrol while Kerosene has been fully stabilized. Oil Marketing Companies (OMCs) will be compensated for the under-recovery of costs from the Petroleum Development Levy (PDL) Fund.
"The purpose of the Petroleum Pricing Regulations is to cap the retail prices of petroleum products which are already in the country so that importation and other prudently incurred costs are recovered while ensuring reasonable prices to consumers," EPRA explained.
Currently, a litre of petrol retails at Ksh206.36 while diesel will is sold at Ksh195.47.
