Households, businesses exposed to high transport, power, commodity prices Tankers discharge fuel at the Kipevu Oil Terminal II at the Port of Mombasa/ KPA Kenyan households are facing tougher economic times as a surge in global oil prices threatens to raise the cost of transport, food, manufacturing, electricity and other essential goods and services.
International crude prices have surged towards $108 a barrel, piling fresh pressure on oil-importing economies as disruptions to key shipping routes threaten to keep energy and commodity prices elevated. Latest disruptions incudes the attack on Saudi Arabia’s East-West Pipeline, also known as Petroline, which bypasses the Strait of Hormuz.
The pipeline which was hit by drones last wek has a maximum capacity of about seven million barrels per day, with the attack reportedly affecting at least 2.5 million barrels a day from an already strained supply chain. Global oil majors have warned of a potential fuel crisis amid continued tapping into rserves by producing and exporting countries.
The shock is already being felt across businesses and households, with manufacturers facing higher freight and input costs, farmers paying more for agricultural inputs and transport operators warning of further pressure on fares. The latest spike in crude prices comes as inflation rises to 6.6 per cent in August from 6.5 per cent in July.
Transport inflation increased by 15.7 per cent year-on-year, while food and non-alcoholic beverages rose by nine per cent. Economists and industry leaders warn that prolonged geopolitical tensions could deepen the pressure by increasing the cost of importing fuel, raw materials, machinery, food and other commodities.
The World Bank has revised Kenya’s 2026 economic growth forecast down to 4.3 per cent, from earlier projections of 4.4 to 4.9 per cent, while the Central Bank of Kenya has lowered its forecast to 4.9 per cent from 5.5 per cent. CBK Governor Kamau Thugge said the revised outlook reflected continued uncertainty and the implications of the Middle East conflict on key sectors of the economy, alongside other risks inldung the El Niño.