Fuel prices headed north as global crude-costs pick up


Fuel prices headed north as global crude-costs pick up

In Summary

  • Brent crude-the primary indicator for global oil prices has for instance recovered from a low USD 50.77 per barrel on Christmas day 2018 to high of USD 70.95 at the close of trade on Thursday
  • The recovery of global crude prices has been guided by among other factors, cuts in production by oil exporters who desired a recovery in earnings from the sale of the black gold as prices nearly bottomed out towards the tail end of 2018.
  • Retail prices for all three petroleum products rose during ERC’s last review on March 14, 2019 by an average of Ksh.1.26 for super petrol, 65 cents for diesel and Ksh.96.61 for kerosene.

Kenyans should brace for an uptick in the retail costs of petroleum products, this as global crude prices continue to rise in 2019.

Brent crude-the primary indicator for global oil prices has for instance recovered from a low of Ksh.5125 (USD 50.77) per barrel  on Christmas day 2018 to high of Ksh.7162 (USD 70.95) at the close of trade on Thursday according to the latest data from global oil indices.

George Wachira, an oil and gas analyst expects the upcoming review of the maximum pump prices by the Energy Regulatory Commission (ERC) to reflect largely on the prevailing international crude prices.

“From an analysis of Brent prices in the international market in recent months, ERC prices are likely to correspond to these changes,” he said.

Wachira who spoke to Citizen Digital on phone however expects the impact of the inflated global prices to have a slow translation effect domestically given the slow measured flow of crude imports into the country.

It takes an approximate one and a half months for oil imports to hit the local market given slow-going transit of crude oil to the port of Mombasa.

Sunday’s review by the ERC is therefore largely anticipated to reflect on global crude prices for the month of February with subsequent audits expected to reflect on current international prices.

The recovery of global crude prices has been guided by among other factors, cuts in production by oil exporters who desired a recovery in earnings from the sale of the black gold as prices nearly bottomed out towards the tail end of 2018.

With the ever present volatility in the price of crude in the international market, Silver House Capital Chief Executive Officer Robert Ndubi recommends the close assessment of the fluctuations by the respective state agencies to mitigate risks emerging from the uncertainty in costs.

“The ERC pricing is to a large extent a reflection of the international market. The market is influenced by many factors which may not necessary lie in the purview of the regulator,” he said.

Retail prices for all three petroleum products rose during ERC’s last review on March 14, 2019 by an average of Ksh.1.26 for super petrol, 65 cents for diesel and Ksh.96.61 for kerosene.

A liter of super petrol in Nairobi at the moment retails at Ksh.101.35 with a liter of diesel trading at Ksh.96.61.

Meanwhile kerosene is trading at a higher price than diesel for the first time at Ksh.99.46 for every liter.

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Story By Kepha Muiruri
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