Kenyan motorists could get relief from soaring fuel prices, but a fresh warning from the World Bank suggests the country’s cost-of-living crisis could face another major test as global energy prices are projected to rise by 32 per cent in 2026.
Treasury Cabinet Secretary John Mbadi has indicated that the government plans to use the fuel stabilisation fund during the November pricing review to cushion consumers against rising petroleum costs, potentially reversing some of the increases experienced by motorists.
His announcement comes against a difficult international economic backdrop, with the World Bank projecting that overall commodity prices will increase by 23 per cent this year as the conflict in the Middle East disrupts oil supplies and pushes energy costs higher.
In its October 2026 Commodity Markets Outlook, released on October 28, 2026, the World Bank warned that energy prices were heading towards a four-year high, reversing three consecutive years of declines.
The institution projected that Brent crude oil would average $91 per barrel in 2026, compared with $69 in 2025, before declining to $79 in 2027.
For Kenya, which relies on imported petroleum products, sustained increases in international oil prices could put additional pressure on fuel import costs, transport charges, food distribution and household budgets.
The warning raises questions about how much relief the government can deliver through the stabilisation fund if international petroleum prices continue climbing.
Speaking during an interview on a local vernacular TV station on Tuesday, November 3, 2026, Mbadi explained that the government deliberately avoided spending money from the stabilisation fund during the October fuel price review to preserve resources for the next adjustment.
“When we saw the stabilisation fund going down, in fact, during the recent fuel price review, we did not use the stabilisation fund because European countries and the West are entering winter, which means energy demand is going up,” Mbadi stated.
The Treasury CS said the government had anticipated that international fuel prices could increase in November as European countries prepare for winter, when demand for energy products traditionally rises.
He explained that retaining the available funds would allow the government to intervene if the anticipated increase materialised.
“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. It is a balancing act,” he said.
Mbadi’s remarks offer hope to motorists who have been hit by successive increases in the cost of petroleum products. However, he did not disclose the amount of money currently available in the stabilisation fund or specify how much pump prices could fall.
The government’s intervention will therefore depend on the resources available and the actual costs of importing petroleum products when EPRA conducts its next review.
The World Bank’s projections highlight the growing pressure facing countries that depend on imported energy, particularly developing economies where higher fuel costs can quickly feed into the prices of essential goods and services.
According to the report, global oil supply is expected to decline by 5.2 per cent in 2026, representing the largest contraction in more than four decades outside the 2020 global recession.
Oil consumption is also forecast to fall by 2.5 per cent, as elevated prices force households and businesses to reduce their energy use.
Despite the anticipated decline in consumption, production is expected to remain below demand, forcing countries to withdraw more oil from their inventories.
This is particularly concerning because depleted reserves leave the international market more exposed to fresh supply disruptions.
Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group, warned that the simultaneous shocks were threatening economies across the world.
“Commodity markets are being hit by several major shocks at once,” Kose said.
“Higher energy costs and trade disruptions are driving up prices across a broad range of commodities, threatening to worsen inflation, food insecurity, and economic growth.”
He added that protecting vulnerable populations and supporting developing economies struggling with heavy debt burdens should be a priority.
For Kenya, the implications extend beyond the cost of filling a vehicle’s tank. Higher petroleum prices can increase the cost of transporting agricultural produce, distributing manufactured goods and operating businesses that depend on fuel.
Public transport operators may also face higher operating expenses, creating pressure to increase fares if fuel costs continue rising.
The World Bank’s warning is particularly significant because it projects that food commodity prices will increase by approximately 10 per cent in 2026 and another 7 per cent in 2027.
The cumulative increase of about 18 per cent over the two years is expected to be driven by disruptions to grain shipments, El Niño-related threats to agricultural harvests and higher fuel and fertiliser costs.
Fertiliser prices alone are forecast to rise by 14 per cent in 2026, adding pressure to agricultural production expenses.
These developments could create another challenge for Kenyan households, which are already sensitive to increases in the prices of maize flour, cooking oil, vegetables and other essential commodities.
When fuel becomes more expensive, transporters and distributors face higher costs of moving goods from farms and manufacturing centres to markets and retail outlets.
Farmers also face the possibility of paying more for fertiliser and other energy-dependent agricultural inputs.
If these costs are passed down the supply chain, consumers could ultimately bear the burden through higher retail prices.
The World Bank warned that the situation could become significantly worse if the Middle East conflict escalates, attacks on Black Sea grain shipments intensify and an unusually strong El Niño damages agricultural production.
Under this adverse scenario, Brent crude could average $105 per barrel in 2027, while food commodity prices could be 12% higher than the institution’s baseline forecast, surpassing their 2022 levels.
Such an outcome would threaten to push more people into extreme poverty, particularly in countries already struggling with food affordability and economic pressures.
The international developments come as Kenyan motorists contend with the latest increase in domestic pump prices announced by the Energy and Petroleum Regulatory Authority.
In its October 14 review, EPRA increased Super Petrol by Ksh12.93 per litre, diesel by Ksh9.90 and kerosene by Ksh28.49.
Consequently, motorists in Nairobi are currently paying a maximum of Ksh226.96 per litre for Super Petrol, Ksh227.76 for diesel and Ksh219.87 for kerosene.
The prices took effect on October 15 and remain applicable until November 14, 2026.
The increases have intensified concerns over the cost of public transport, goods distribution and household energy expenses, particularly for low-income families that spend a significant portion of their earnings on essential commodities.
Mbadi has maintained that the government uses subsidies to prevent international price increases from being transferred entirely to consumers.
“We do not want fuel prices to increase significantly. Besides the VAT, there is a certain amount of money that we use to stabilise the prices. It is called a subsidy that we pay those who sell us fuel so that they do not increase the prices of fuel,” he explained.
The intervention is intended to compensate oil marketers for part of the additional costs, allowing consumers to benefit from more stable pump prices.
However, the stabilisation mechanism also depends on the availability of public funds, raising questions about how long the government can sustain subsidies if global petroleum prices remain elevated.
Even as the government considers using public funds to cushion motorists, Mbadi has defended the various levies imposed on petroleum products, arguing that removing them would create financing gaps elsewhere in the economy.
He specifically cited the Road Maintenance Levy, which helps finance the construction and maintenance of roads.
The CS argued that lowering fuel prices by eliminating such charges would not necessarily reduce the overall cost of transport if the government failed to maintain the road network.
“Something like the Road Maintenance Levy, we must ensure that our roads are constructed. Now we have better roads. Remember that even if fuel prices go down, but the roads are bad, you will still spend more on fuel,” Mbadi stated.
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