More pain ahead at the pump as global crude prices hit 2-year high
Kenyans are headed for more pain at the pump as global crude prices return to highs last seen two years ago.
On Tuesday, Brent, the premium crude component and the global oil-price benchmark closed above $70 (Ksh.7546) for the first time in two years.
This is as investors and traders cited optimism on improving demand for oil across the globe as economies continue to re-open from COVID-19 related restrictions.
At the same time, members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies agreed to continuously relax restrictions on production, a signal to the group’s confidence on improving oil demand.
On Monday, an internal OPEC technical committee triggered the current rally in crude prices after preempting a rebound in oil demand by about six million barrels a day.
The rebound in the demand for oil has further found anchoring in the successful roll out of vaccines among developed economies allowing for a near complete re-opening of countries.
The price of Murban, the component from which Kenya imports its petroleum products stood at $69.67 (Ksh.7510) a barrel in early trading on Wednesday, the highest since early May, 2019.
The full rebound in oil demand technically marks the boundary to relief on fuel costs to consumers after the collapse of fuel costs for the better part of 2020.
Domestically, Kenyans paid their lowest prices for fuel in June when a litre of petrol averaged Ksh.90.34 across the country while diesel and kerosene costs stood at a mean Ksh.75.88 and Ksh.63.79 respectively.
This year, fuel prices have been on the rise in all months but April when the Energy and Petroleum Regulatory Authority (EPRA) surprised the country with an unscheduled hold to maximum pump costs.
Nevertheless, the infiltration of new taxes and levies over the years denied Kenyans the full complement of relief from the deceleration of global oil prices last year.
An analysis of new petrol costs effected on May 14 for instance show taxes and levies contributing to 45.7 per cent of the total price or a respective Ksh.57.77.
A litre of petrol in Kenya’s Capital Nairobi presently retails at Ksh.126.37, the highest cost ever for the commodity.
To remedy the price hike concerns, the Petroleum Ministry has been working on a price stabilization mechanism which would see Kenyans cushioned when fuel costs hit the ceiling.
On Wednesday, Petroleum Cabinet Secretary John Munyes failed to honor an invitation by the Senate Energy Committee to explain the runaway fuel costs warranting the wrath of members who now want him to appear before the Committee without fail on June 14.
“This sudden increased of fuel seem to coming on week after week even as Kenyans grapple with hardships. We are concerned as a Committee to ensure this matter is checked,” said the Committee’s Chairperson Senator Ephraim Maina.