Energy ministry elucidates why fuel prices keep escalating amid middle east turbulence

The Ministry of Energy and Petroleum has attributed the continuous escalation of domestic fuel prices to severe geopolitical tensions in the Middle East, which have heavily destabilised international energy markets and driven up global crude oil benchmarks.In an official statement by Energy Cabinet Secretary Opiyo Wandayi, the government clarified that as a net importer of petroleum products, the local economy remains fully exposed to external market shocks that dictate the landed cost of fuel.

Core Drivers of the Price EscalationThe Ministry highlighted several compounding global factors driving up retail pump prices:Spike in Landed Costs: The average landed cost for imported Super Petrol surged by 10% (moving from $823.27 to $906.23 per cubic metre), while Diesel costs jumped by 20.32% ($1,073.82 to $1,291.98 per cubic metre) over the recent cycle.Strait of Hormuz Instability: Ongoing military risks and security threats along critical maritime trade routes have disrupted global supply chain logistics.Surging Insurance and Freight Rates: Due to the heightened risks of navigating conflict zones, maritime shipping premiums and spot freight rates have more than doubled internationally.

Global Supply Imbalances: Broad international uncertainty and restricted cargo availability have sparked massive oil price volatility.Government Interventions and Mitigation MeasuresTo prevent prices from spiralling entirely out of reach for consumers, the Ministry highlighted existing policy frameworks being used to cushion the public:InterventionMechanism DetailsPrice Stabilisation SubsidyDeployed KSh 5 billion from the Petroleum Development Levy (PDL) to directly subsidise and hold down the costs of Diesel and Kerosene.

Tax ReductionsReduced the Value Added Tax (VAT) burden on petroleum products from 16% down to 8%.G-to-G FrameworkLeveraged the Government-to-Government fuel importation deal to bypass runaway spot market freight fees and secure more stable premium structures.Despite massive public outcry regarding the high cost of living, the Energy Ministry maintained that local fuel stocks remain entirely adequate and secure, warning retail players against artificial hoarding or profit-driven price exploitation during this volatile period.