President William Ruto’s plan to fully scrap fuel subsidies will face major headwinds after the world's top oil-producing countries agreed to deeply cut exports to prevent erosion of revenues.
A group of 23 oil-exporting countries, commonly known as Opec+, on Wednesday, reached a deal to slash production by two million barrels per day, a move targeted at pushing prices per barrel back to $100 per barrel for the first time since July.
The cartel, which includes 13-member Organization of the Petroleum Exporting Countries (Opec) like Saudi Arabia and allies like Russia, said the decision was aimed at stabilising prices.
The decision by Opec+ countries has dimmed expectations of lower fuel prices in coming months, a projection that partly informed Kenya’s decision to remove subsidy on petrol last month.
“There was hope that the drop in global fuel prices might start filtering through the economy. Net importing countries like Kenya had been hoping for more relief, particularly with the removal of the subsidy programme,” said Ken Gichinga, chief economist at Mentoria Economics. “But now the price drop might not be as significant as we had expected.”
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