International oil prices increased significantly during the week owing to the diplomatic breakdown in the Middle East and Israel.
As highlighted by the Central Bank of Kenya (CBK) in its weekly economic review, prices of Murban oil prices increased by over Ksh300.
CBK explained that the hike was occasioned by the move of the United Arab Emirates (UAE) to cut diplomatic ties with Israel owing to the conflict in Gaza.
"International oil prices increased during the week ending April 4, as the United Arab Emirates (UAE) cut diplomatic ties with Israel. Murban oil price increased to USD 89.83 per barrel on April 4 compared to USD 86.33 on March 28," read the statement in part.
Notably, the prices international oil prices have been increasing this year owing to the conflicts across the globe and the fall in supplies.
How It Could Impact Kenya
With the increase in global prices, the expectation is that fuel prices should rise.
However, given that the shilling has been appreciating against the dollar, the impact could be minimal. This is because imports are usually done in dollars.
This low impact was also projected by CBK Governor Kamau Thugge during the Monetary Policy Committee (MPC) meeting on Thursday, March 4.
According to Thugge, the prices could either drop or remain around the region of the prices that were announced last month.
"We should see that upward trend (global prices) mitigated by the appreciation of the exchange rate alongside the decline in import inflation," he stated.
Currently, motorists in Nairobi are purchasing diesel and petrol at Ksh190.38 and Ksh199.15 respectively.
Meanwhile, the Energy and Petroleum Regulatory Authority (EPRA) is expected to review pump prices for April-May on Sunday, April 14.
Whether Kenyans will enjoy another drop in prices remains unknown. However, EPRA will factor in the exchange rate, global prices, importation costs and petrol subsidies when calculating the new prices.
