NAIROBI, Kenya — Fuel prices in Kenya are set to rise in May, driven by volatility in global oil markets linked to the ongoing Middle East conflict, Treasury Cabinet Secretary John Mbadi has told lawmakers, even as the government moved to calm fears over economic stability.
Appearing before the National Assembly’s Finance and National Planning Committee on Wednesday, April 2, Mbadi said higher import costs expected in May and June would likely reflect surging global prices following disruptions in energy supply chains, including the closure of the Strait of Hormuz—a critical oil transit route.
“The imports for May and June are likely to reflect higher global prices, posing a risk of increases in domestic pump prices with attendant inflationary pressures,” Mbadi said.
G-G Deal Buffer
However, the CS assured legislators that Kenya’s government-to-government (G-G) oil supply arrangement with Middle East suppliers would cushion consumers from extreme spikes.
Under the deal, Kenya sources petroleum from Aramco Trading Fujairah FZE, ADNOC Global Trading Ltd, and Emirates National Oil Company—firms obligated to supply fuel regardless of source disruptions.
Despite looming increases, Mbadi maintained that the economy remains resilient, with growth projected at 5.3pc in 2026 and 2027, up from 5.0pc in 2025.
Inter-Ministerial Response
The government has constituted an inter-ministerial team to monitor the evolving situation and recommend interventions to shield the economy from external shocks.
“As a responsible government, we are taking a whole-of-government approach to assess various scenarios and determine appropriate responses,” Mbadi said.
Kenya currently holds adequate fuel stocks, with reserves of super petrol, diesel, and jet fuel sufficient to last between 16 and 49 days, alongside additional shipments expected in April.
Still, Mbadi cautioned that sustained Middle East conflict could further strain supply chains, increase freight and insurance costs, and exert pressure on inflation.
Anti-Hoarding Warning
The CS warned oil marketers against hoarding fuel in anticipation of higher prices, saying the government would take action against speculative practices.
In the event of prolonged market instability, Mbadi said the government is considering tax adjustments, including a shift to an ad valorem tax system to ease consumer burden.
MPs Demand Early Action
Committee Chairperson Kuria Kimani pressed the Treasury on the need for early interventions, drawing parallels with tax relief measures implemented during the Covid-19 pandemic.
“CS, we reduced taxes during the COVID pandemic to cushion the people from the price surges experienced then. How do we ensure that we can make an intervention earlier rather than later?” Kimani asked.
Homabay Town MP Peter Kaluma urged accelerated investment in e-mobility to reduce fuel dependence.
“The use of electric motor vehicles, especially for public service. That’s an intervention … Ethiopia is looking at that direction, not because of the current situation, but as government policy which might ease pressure on such occurrences,” Kaluma stated.
Diversification Push
Committee Vice Chair David Mboni (Kitui Rural) called for diversification of oil import sources, including African markets and Turkana oil.
“As a country, have you considered importing fuel from other African countries, Nigeria, and which are producing fuel, and which, the transit of that fuel, does not go through the strait of Hormuz?” Mboni posed.
Export Losses, Port Gains
Beyond fuel, Mbadi warned that the conflict is already affecting Kenya’s exports, particularly tea, due to disrupted trade routes and weakening bilateral agreements.
The country is losing up to Sh250 billion weekly as exports of live animals and meat to Gulf markets—especially the United Arab Emirates and Saudi Arabia—stall amid the crisis.
However, the disruption has also presented opportunities, with increased global shipping rerouting boosting activity at Lamu Port, where daily revenues have surged significantly due to higher transshipment volumes.
“While the crisis poses risks, it also elevates Kenya’s strategic position as a regional logistics hub,” Mbadi said.
