NAIROBI, Kenya — Kenya could face a fresh surge in fuel prices in March after Iran closed the Strait of Hormuz following escalating tensions with the United States and Israel, disrupting a key global oil shipping route.
The Strait of Hormuz, which handles about 20pc of the world’s oil and gas flows, is considered one of the most critical and cost-effective maritime corridors for Gulf crude exports. Its closure has effectively stalled international shipping through the channel, triggering fears of sharp increases in global crude prices.
Analysts project oil prices could surge past USD 100 (about Sh12,800) per barrel, a significant jump from the recent spike to USD 67 (about Sh8,500) per barrel, the highest level recorded since August 2025.
Implications for Kenya
Kenya, a net oil importer, remains exposed to global price shocks. Even under the government-to-government (G-to-G) oil import arrangement with Saudi Arabian suppliers, rising global freight and insurance costs could translate into higher pump prices.
Although the G-to-G deal includes fixed freight rates, the heightened conflict risk in the Gulf may force oil shipments onto alternative, longer, and more expensive routes, including rerouting around Africa. Such adjustments would increase marine insurance premiums and transportation costs, ultimately pushing up the landed cost of fuel at the Port of Mombasa.
The Strait of Hormuz serves as the primary export route for major oil producers, including Saudi Arabia and the United Arab Emirates (UAE). Any prolonged disruption is expected to ripple across global energy markets.
EPRA’s Recent Price Cut
The potential price surge comes barely weeks after the Energy and Petroleum Regulatory Authority (EPRA) reduced fuel prices in its February 15 to March 14 review cycle.
EPRA lowered:
- Super Petrol by Sh4.24
- Diesel by Sh3.93
- Kerosene by Sh1.00
Petrol currently retails at Sh178.28, Diesel at Sh166.54, and Kerosene at Sh152.78 per litre in Nairobi.
The reduction followed a decline in global landing costs. The average landed cost of Super Petrol fell by 2.69pc from Sh76,288.03 per cubic metre in December to Sh74,239.91 in January 2026.
Diesel’s landed cost declined by 6.37pc from Sh80,733.36 to Sh75,587.29 per cubic metre, while Kerosene dropped by 1.44pc from Sh78,260.16 to Sh77,135.62 per cubic metre.
Economic Pressure Ahead
Any sustained rise in crude oil prices above USD 100 per barrel would likely reverse recent gains and pile pressure on inflation, transport costs, and food prices.
Kenya’s fuel pricing formula, administered by EPRA, factors in international crude prices, freight, insurance, exchange rates, and statutory levies. A spike in global oil benchmarks would therefore feed directly into domestic pump prices during subsequent review cycles.
Economists warn that if the Strait of Hormuz disruption persists, Kenya could face renewed fuel price volatility just as inflationary pressures begin to ease.
