Falling crude oil prices raise hope of relief at the pump

Crude oil prices have fallen by more than 25 per cent, raising hopes for lower fuel prices in the country as a deal between the United States and Iran nears conclusion.

Following the announcement of a truce between the US and Iran at the beginning of the week, crude oil prices fell to nearly $70 (Sh9,170) per barrel, down from a high of over $100 (Sh13,000) in March. 

However, prices gained slightly on Friday to around $80 (Sh10,400) per barrel following the postponement of the deal, which was set to be signed in Switzerland on the same day. 

The US-Iran conflict, which broke out in February this year, has affected the movement of ships across the Persian Gulf, where Iran controls the Strait of Hormuz, a critical waterway for oil products. 

This unrest in the Middle East has largely been used by government officials to explain the high fuel prices, claiming that prices would be hovering around Sh250 a litre without the state's intervention. 

The current fuel prices stand at Sh214 per litre for super petrol, Sh222 per litre for diesel and Sh191 per litre for kerosene. These prices, however, are without the full value-added tax (VAT), as the government halved it to eight per cent to ease the cost of living.

Without this VAT cut, super petrol would be above Sh220 and diesel at Sh230. 

Both President William Ruto and Energy and Petroleum Cabinet Secretary Opiyo Wandayi have hailed the government-to-government (G-2-G) deal between Kenyan oil marketers and their counterparts in Saudi Arabia and the United Arab Emirates (UAE), which they argue has ensured the flow of fuel despite the Middle East crisis.

The International Energy Agency (IEA) notes in its June 17, 2026, update that, as a result of the truce between the two countries, oil prices have retreated from recent highs as market tensions ease amid a surge in exports from the Gulf region.

“ICE Brent futures traded at around Sh10,530 (USD 81) per barrel at the time of writing, Sh4,810 (USD 37) per barrel below an early April peak but still about Sh2,600 (USD 20) per barrel higher than at the start of the year,” says the IEA in its publication.

Reuters reported on Friday that the talks on the technical parts of the deal between the two nations would not take place as planned.

It added that US Vice President JD Vance dropped plans to travel for the meeting, causing anxiety over the sustainability of the deal.

“If the deal holds, exports and production from the Gulf should see a gradual recovery – not least because Iranian oil exports can fully resume once the US blockade is lifted,” the IEA adds in its publication.

Although Kenya does not purchase crude oil, it imports refined petroleum products. Declining crude oil prices may result in lower pump prices. 

An analysis by The Standard shows landed costs of petroleum products into the country over the first six months of the year nearly doubled.

This increase has largely been attributed to a rise in the landed costs of diesel and kerosene, which went above $1,000 (Sh130,000) per cubic metre. 

While the landed cost of super petrol went up 52 per cent to $901.16 (Sh117,150) per cubic metre, diesel increased by 106.5 per cent to $1,294 (Sh168,312). 

Kerosene, whose landed cost was $607 (Sh78,910) per cubic metre in December 2025, is now $1,328 (Sh172,640). 

In the latest fuel price cycle, as announced by the Energy and Petroleum Regulatory Authority (EPRA), super petrol saw a negligible drop of Sh0.22, while diesel went down by Sh10. Kerosene prices remained unchanged. 

CS Wandayi explained that the drop in diesel prices, a promise made by President Ruto when he met transport stakeholders after unrest, demonstrates that the government is sensitive to the plight of its people.

“If the government had left the forces of demand and supply to operate freely, today we would be talking about diesel at the pump being Sh260 a litre,” he said during a recent interview.

He defended the G2G deal, saying the freight and premium costs in the agreement are fixed at $78 (Sh10,140) per metric tonne for diesel and $84 (Sh10,920) for petrol.

“That cost is very competitive if you look at what is happening in the international market,” he said. “During the months when the war intensified, those rates skyrocketed to $300 (Sh39,000) per metric tonne.”