Oil cost’s seven-year high sparks supply fears

Fuel pump

Fuel attendant holding a fuel pump at a filling station along Kimathi Street in this picture taken on June 8, 2021.

Photo credit: Jeff Angote | Nation Media Group

Global oil prices rallied to a seven-year high on Thursday, signalling more pressure on Kenya that has for months splashed billions of shillings in subsidy to soothe public outrage over expensive fuel.

Oil prices struck $90 (Sh10,218.60) a barrel on Thursday, market reports showed. This was amid tensions between Russia and western nations over threats on Ukraine by Kremlin.

Russia, the world’s second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears of disruption of energy supplies to Europe.

Sustained high oil prices point to heightened risks of imported inflationary pressure on the pricing of consumer products and services in months to come.

The high fuel prices are presently having a knock-on effect on the cost of living and doing business in the country, with the price of goods, household energy bills, and transport going up and raising inflation to an 18-month high of 6.57 per cent in August.

The knock-on effect on the Kenyan economy whenever crude prices go up is pronounced, with transport costs a big factor in the final price of all goods and services.

The economy uses diesel for electricity generation, meaning, higher prices of the fuel will automatically result in higher fuel cost charges on power bills.

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