Oil prices edged slightly lower to erase weekly gains on Friday after US President Donald Trump urged OPEC to bring down oil prices, adding that the higher prices fueled the Russia – Ukraine War.
- Speaking at the World Economic Forum in Davos, Switzerland, Trump said he will ask Saudi Arabia and OPEC to bring down the cost of oil in line with his energy policies – a tactic he used in his first term in a bid to talk down prices.
- OPEC+ cut out 2.2 million barrels per day from the market, to prevent prices from falling further amid a bear oil market experienced in 2024 owing to overproduction and depressed demand in China.
- Last month, OPEC+ extended the production cuts to April 2025 saying it would unwind the output cuts gradually in the year.
“I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil,” Trump told the World Economic Forum on Thursday in Davos, Switzerland.
Kenya’s supplier UAE Murban declined 2.1% week on week from to trade at US$81.91 per barrel while the global benchmark Brent Crude declined by 3.1% to trade at US$78.39. WTI eased 3.6% week on week to trade at US$74.74per barrel.
Trump said the high fuel prices were fueling the Russia-Ukraine War, claiming that a fall in prices would end the dispute. “If the price came down, the Russia-Ukraine war would end immediately,” Trump said on Thursday. Russia is a big crude oil exporter globally and revenues from the oil is used to support the war which first began in 2014.
“They’re very responsible, actually, to a certain extent, for what’s taking place,” Trump said, referring to the Saudis and OPEC.
“With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world,” Trump said as he urged the Federal Reserve to cut rates further.
Why the falling prices do not benefit Kenya just yet
Kenya signed a deal with 3 state owned Gulf companies in April 2023 as a temporary measure to help ease foreign exchange pressures. The agreement with the Gulf companies included 180-day credit terms, enabling the country to accumulate dollars gradually for purchases, removing the need for importers to spend millions of dollars every month.
Despite the global easing of oil prices, Kenyans did not benefit, following the G-to-G Oil deal signed by the government. In the deal, the three oil firms are purchasing the oil at fixed prices of US$90 per barrel for Petrol and US$88 per barrel for Diesel. Almost a year later, the Treasury admitted that the arrangement did not ease FX pressures but instead caused distortions. Despite this, the government extended the deal last December, withholding the end date.
