A pump attendant fuels a vehicle at Total Kimathi Street in Nairobi on February 14, 2020. Industry players say local prices are expected to drop significantly by May or June. PHOTO | FILE | NATION MEDIA GROUP As the world oil industry goes through a price turmoil, Kenyans can look forward to reaping some benefits, albeit not immediately.
The price of fuel is a major gauge of the cost of living, determining what Kenyans pay for transport and the cost of goods.
Tuesday, panic gripped global traders, a day after US crude futures crashed below zero for the first time in history as the Covid-19 crisis crippled energy demand and worsened a supply glut.
PRICE CRASHED
The price of US oil crashed into negative for the first time in history on Monday as demand dries up amid the coronavirus crisis. The cost for a barrel of US crude to be delivered in May dropped to negative $37.63.
The drop occurred because contracts for May deliveries were to expire yesterday and traders are set to run out of storage within the next two weeks. The negative price means traders were paying buyers to take the oil off their hands.
With the world airlines that consume about five million barrels a month grounded, the buyers have nowhere to stock their products, leading to a near market collapse.
Kenya imports its oil products from Saudi Arabia and the United Arab Emirates, which will be hurt by the current market tumble.
Market players in Kenya are unanimous that the fall in crude prices would have a significant bearing on prices locally, but would not state by how much.
Mr Pavel Oimeke, the director-general of the Energy and Petroleum Regulatory Authority (Epra), said Kenyans should expect a significant reduction in pump prices for petroleum products if the trend is sustained.
CRUDE PRICING Oil marketers agree with this: “The negative crash of crude oil prices was in the US, and we don’t buy crude. But the direction of crude pricing is always indicative of the direction the pricing of refined products will take,” said Mr Martin Kimani, the managing director of Rubis.His counterpart at Total Kenya, Mr Olagoke Aluko, concurred, saying: “It’s what is happening across the world and so it’s only natural to expect further drops.”Kenyans will, however, reap the benefit from the next imports, which could take more than a month to arrive.According to an expert in the industry, […]
