International oil prices have retreated sharply, but Kenyan motorists face a crucial question as the Energy and Petroleum Regulatory Authority (EPRA) prepares to announce new pump prices on November 14: will the decline translate into cheaper petrol, diesel and kerosene, or will other import costs eat into the expected relief?
With only three days remaining before the announcement, developments in the international petroleum market have raised hopes of a reversal of the October fuel price increases that pushed petrol in Nairobi to Ksh226.96 per litre and diesel to Ksh227.76.
The Central Bank of Kenya (CBK) recorded a significant decline in Murban crude oil prices, while the Kenyan shilling maintained its stability against the US dollar.
However, a fresh assessment of the international oil market by the United States Energy Information Administration (EIA) suggests that the improvement may not be enough to guarantee a substantial reduction at local filling stations.
The difference between falling crude prices and the actual cost of importing refined petroleum products could prove decisive in EPRA’s November 14 announcement.
According to the CBK’s Weekly Bulletin published on November 6, Murban crude oil prices declined from USD 110.46 per barrel on October 29 to USD 94.04 on November 5.
The USD 16.42 reduction represents a 14.86 per cent decline in seven days, offering a potentially favourable development for a country that relies heavily on imported petroleum products.
In its November 6 bulletin, the CBK attributed the movement to developments following the United States midterm elections and expectations of reduced risks of disruption to oil supplies from the Middle East.
“Murban crude oil prices declined to USD 94.04 per barrel on November 5, from USD 110.46 per barrel on October 29,” the regulator reported.
The decline is particularly significant because international petroleum costs are among the major components influencing the prices Kenyan consumers pay at filling stations.
However, another international market indicator provides a more complicated picture.
The EIA’s November 10 Short-Term Energy Outlook reported that Brent crude averaged USD 124 per barrel in October, its highest monthly average since July 2022.
Although Brent prices subsequently fell below USD 100 per barrel on November 4, the agency expects them to average approximately USD 100 in November and December.
The EIA attributed the continuing pressure to constrained oil flows, geopolitical risks and longer shipping routes.
The Brent and Murban figures represent different crude benchmarks and should not be treated as directly interchangeable. Nevertheless, together they illustrate how quickly international oil market conditions can change.
The international price decline comes at a critical point in Kenya’s monthly petroleum pricing calendar.
EPRA’s current prices, covering October 15 to November 14, pushed Nairobi’s maximum retail prices to Ksh226.96 for Super Petrol, Ksh227.76 for diesel and Ksh219.87 for kerosene.
The regulator increased petrol by Ksh12.93 per litre, diesel by Ksh9.90 and kerosene by Ksh28.49 in the October review.
But the latest fall in crude prices does not automatically translate into an equivalent reduction in Kenyan pump prices.
Under the Energy (Petroleum Pricing) Regulations, 2022, EPRA calculates the landed cost using the weighted average cost of qualifying imported petroleum cargoes discharged at the Port of Mombasa.
The relevant assessment period runs from the 10th day of the preceding month to the 9th day of the pricing month.
The regulator then factors in expenses such as port handling, storage, transportation, inventory financing, wholesale and retail margins, and applicable taxes.
This means the November review will reflect more than the latest international crude quotation.
In particular, the timing of imported cargoes, their actual acquisition costs and the exchange rate will determine how much of the international price decline can be reflected in domestic pump prices.
For motorists, this is an important distinction: a nearly 15% decline in Murban crude does not mean petrol prices will automatically fall by a similar percentage.
Currency movements provide another important consideration ahead of the announcement.
According to the CBK, the Kenyan shilling exchanged at Ksh129.96 against the US dollar on November 5, unchanged from October 29.
This stability could help prevent exchange-rate fluctuations from cancelling out some of the benefits of cheaper international petroleum imports.
The government’s proposed intervention through the Petroleum Development Levy stabilisation fund could also influence the final outcome.
Treasury Cabinet Secretary John Mbadi indicated that the government had deliberately avoided using the fund during the October review to preserve resources for the November pricing cycle.
Speaking during an interview with Ramogi FM on November 3, Mbadi said the government had anticipated higher international energy demand as European countries entered winter.
“So we projected that fuel prices in November might go up, so we did not use the funds last month so that we can use them this month to reduce the prices of fuel,” Mbadi said.
His remarks raised expectations that the government could deploy the available resources to cushion consumers during the November-December pricing cycle.
However, Mbadi did not disclose the amount available in the fund or how much would be allocated to each litre of petrol, diesel and kerosene.
The stabilisation intervention therefore remains an important variable rather than a confirmed reduction in pump prices.
The November 14 announcement will determine whether the recent international oil-price decline translates into tangible relief for Kenyan consumers.
Petrol motorists will be watching for a reversal of the October increase, while diesel users have additional reasons to follow the announcement.
Diesel is particularly important to Kenya’s transport and distribution networks, where fuel expenses influence the cost of moving agricultural produce, manufactured goods and other commodities.
Households using kerosene will also be watching closely following the substantial increase recorded in the previous review.
A reduction in petroleum prices could ease operating expenses for transporters and businesses. However, lower fuel prices would not automatically guarantee cheaper matatu fares, food or other household commodities.
For now, three developments offer some grounds for cautious optimism: the decline in Murban crude prices, the shilling’s stability and the government’s indication that it intends to use the stabilisation fund.
Against these is the uncertainty surrounding actual landed petroleum costs and continuing international supply pressures.
EPRA is expected to publish the new maximum retail prices on November 14, with the revised rates taking effect on November 15 for the next monthly pricing cycle.
The real test will be whether the international oil-price retreat is reflected in Kenya’s import costs strongly enough to bring down the record-high pump prices facing motorists.
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