Ministry Gives Timeline for Fuel Price Cuts Following Strait of Hormuz Reopening

Jukwaa

🇰🇪 Breaking It Down

Speaking during an interview at NTV on Monday, June 15, Wandayi explained that while stability in the Middle East will eventually lower international prices, the impact would not be immediately felt by Kenyan consumers.

According to the CS, Kenya's fuel pricing mechanisms went beyond what was happening in the Middle East.

"When the situation in the Middle East stabilises and there is a resumption of normal supply along the Strait of Hormuz, we will be able to see the benefits come down to consumers, but it cannot be instant," Wandayi stated.

📌 What You Need to Know

According to the CS, Kenya's pricing formula relies solely on international benchmark prices from the previous month, meaning changes in global oil markets take time to be reflected in the country's pump prices.

Wandayi noted that fuel discharged into the country during a given month is priced using international benchmark rates from the preceding month, creating a lag between global market movements and local pricing adjustments.

"Fuel that is discharged in month X is priced against international benchmark prices of X minus one. Therefore, any benefit arising from stability will come to consumers progressively," he explained.

For instance, if the deal between the U.S and Iran is reached in June, as announced, and the Strait of Hormuz is opened immediately, Kenyans might start feeling ease in fuel prices by around August.

The remarks come amid reports that Iran and the U.S had reached an agreement on a ceasefire and unconditional and immediate opening of the Strait of Hormuz, a key shipping route for over 20 per cent of the world's oil products.

However, Wandayi stated that the prices currently enjoyed by Kenyans at the pump are subsidised prices and any reduction in prices will be calculated from the actual price of fuel without the subsidies.

📰 Source: Kenyans.co.ke

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