A plunge in crude oil prices between Saudi Arabia and Russia occasioned by coronavirus outbreak spells good news for Kenyans as fuel and electricity prices will go down.
The prices plummeted by 25 percent putting the price of crude oil at $33.90 per barrel which is the lowest since 1991when the Gulf War broke.
The reduced fuel prices are expected to be reviewed in March and April based on the prices of crude oil in early February.
The Energy and Petroleum Regulatory Authority says that the prices for petrol, diesel, kerosene and cooking gas could lower as a barrel of crude oil is currently retailing at $67.80, reports Business Daily.
With the expected favourable review by the regulatory authority, Kenyans can heave a sigh of relief as increased fuel levy means digging deeper into their pockets to foot for increased prices of fuel in the market.
Jibran Qureishi, the Stanbic regional economist for East Africa says that continued reduction of fuel prices will reduce inflation over time. In February, inflation rose to a high of 6. 37 percent from 5.37 percent in January.
“Given that Kenya is a net importer of oil, lower international oil prices will be substantially positive for the balance of payments. Naturally, this will reduce imported inflation over time,” Qureishi stated.
“Arguably, this rapid decline in international oil prices should with a two-month lag or so, reflect in domestic pump prices and lower headline inflation in the next couple of months, especially as base effects unwind,” he added.