Oil prices increased during the week ending January 6th 2022, largely due to improved oil demand.
According to the Central Bank of Kenya(CBK) Weekly Bulletin, this is despite concerns about the rapid spread of COVID-19 Omicron variant and renewed restrictions especially in Europe.
Murban oil prices rose to US$ 80.30 per barrel on January 6 from US$ 78.92 per barrel on December 30th 2021.
In Kenya, all attention will be on its Energy&Petroleum Regulatory Authority(EPRA) this Friday as it sets out new fuel pump prices for the January 15th-February 14th 2022 period.
EPRA has held fuel prices at the same level since November and December 2021.
The recommended price of a litre of Super Petrol remains at KSh 129.72, Diesel at KSh 110.60 per litre and KSh 103.54 per litre of Kerosene in Nairobi.
Local pump prices have held despite increase in cost of imported Super Petrol and Diesel.
Figures from EPRA shows that the average landed cost of Super Petrol increased by 3.59% from US$ 606,06 per cubic metre in October 2021 to US$ 627.80 per cubic metre in November 2021. Diesel increased by 6.98% to US$ 600.22 per cubic metre during the same period under consideration while that of kerosene rose by 15.78% to US$ 604.43 per cubic metre in November 2021.
The Free On Board(FOB) price of Murban crude oil lifted in November 2021 was posted at US$ 73.41 per barrel, an increase of 5.28% from US$ 69.73 per barrel in October 2021.
Apart from rising crude oil prices, pressure will also be mounted at the local fuel pumps but a Kenya Shilling that has continued to weaken against the US Dollar.
Figures from the CBK weekly bulletin shows that the Kenya Shilling exchanged at KSh 113.17 per US $ January 6th, compared to KSh 113.13 per US $ on December 30th 2021. The local unit was exchanging at KSh 111.10 against the US$ in October 2021 and KSh 112.33 against the greenback in November 2021.
Meanwhile, OPEC and allied oil-producing countries are expected to press ahead with restoring cutbacks in output made during the depths of the coronavirus pandemic as hopes grow that travel and demand for fuel will hold up despite the rapid spread of the omicron variant.
The 23-member OPEC alliance, led by oil cartel member Saudi Arabia and non-member Russia, meets online every month to decide production levels for the month ahead.
OPEC decided to cautiously raise production at its December 2021 meeting that set production for January 2022 and reassured jittery markets by saying the decision could be quickly revisited if it became apparent omicron was having a severe impact.
The production increases are gradually restoring deep reductions made in 2020 as demand for motor and aviation fuel plummeted because of pandemic lockdowns and travel restrictions.
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