Calm before storm: Why oil prices may rise in May

Kenya’s energy sector is on edge amid fears of looming fuel price shocks following escalating tensions in the Middle East, the main source of the country’s oil imports.

However, experts have urged calm, saying there is no immediate cause for alarm because Kenya has oil reserves expected to last until the end of April 2026.

Speaking on Spice FM on Thursday, Petroleum Outlets Association of Kenya (POAK) official Martin Chomba warned that prolonged attacks and retaliatory strikes involving Iran and its neighbours could disrupt the global oil supply chain, with the effects eventually reaching Kenyan consumers.

According to him, pump prices are likely to rise beginning in May.

“There is no immediate cause for concern in Kenya. The common citizen should not worry to the point of going out there scampering for fuel. We are not there yet,” said Chomba.

“Our fuel passes through the Strait of Hormuz, which borders Iran and Saudi Arabia. Iran has declared this strait closed and is targeting vessels. If these tensions persist, we will definitely feel the heat. Mind you, about 20 per cent of global oil passes through this route,” he added.

The White House under President Donald Trump projected that the attacks, code-named Operation Epic Fury/Roar of the Lion, could end within four or five weeks. However, concerns remain that the conflict could drag on, similar to the Russia-Ukraine war, now in its fifth year.

In its February review, the Energy and Petroleum Regulatory Authority (EPRA) announced lower fuel prices, with petrol, diesel and kerosene retailing at Sh178.28, Sh166.54, and Sh152.78 per litre, respectively, in Nairobi.

Yesterday, Iran’s Islamic Revolutionary Guard Corps claimed it had taken “complete control” of the Strait of Hormuz.

The claim was quickly countered by President Trump, who assured oil tankers of protection from the US Navy to ensure the continued flow of energy supplies to global markets.

Major shipping companies, including Maersk (Denmark), Hapag-Lloyd (Germany), MSC (Switzerland/Italy), CMA CGM (France), and COSCO (China), have all suspended operations in the Gulf region, citing safety concerns.

Chomba said the disruptions should serve as a wake-up call for African countries to reduce their dependence on imported refined fuel by investing in energy infrastructure, including refineries.

“Hoping that the tensions don’t last is not a strategy. We literally cannot go beyond a month without an oil ship docking at the Port of Mombasa. We don’t have a strategic oil reserve as provided for in the Petroleum Act. It is time to actualise it,” he said.

The Petroleum Act, 2019, outlines how oil stocks should be managed and financed to ensure an uninterrupted supply for domestic and industrial use, safeguarding the economy from disruption.

The Energy Cabinet secretary and the Energy and Petroleum Regulatory Authority are mandated to oversee the process.

While Kenya has an extensive oil distribution system managed by the Kenya Pipeline Company (KPC), it lacks modern refineries and relies heavily on imports from Saudi Arabia, the United Arab Emirates, and Kuwait, countries whose energy installations have been targeted by Iranian missiles and drones.

“Changamwe refinery, for instance, has become a storage facility. It became inefficient because its original design confined it to cutting petrol, diesel, and kerosene but modern refineries have to produce so many by-products from the crude to make financial sense,” noted Chomba.

Although the government-to-government (G to G) oil import arrangement has eased pressure on Kenya’s dollar reserves, the country may now face alternative sourcing options that could increase costs and extend delivery times for shipments arriving at the Port of Mombasa.

Experts have suggested sourcing fuel from Russia, the United States, or North and West Africa. Oil marketers could also bypass the Strait of Hormuz by routing shipments around South Africa’s Cape of Good Hope when importing from the Middle East.

Global energy prices have been rising steadily since the joint US-Israel attack on Iran on Saturday last week.