NAIROBI, Kenya, Jun 14 — Motorists, transporters and businesses are awaiting Sunday’s fuel price review with heightened anticipation after last month’s steep price hikes triggered protests and forced the government to promise fresh relief at the pump.
The June-July pricing announcement by will be closely scrutinised for signs that the Energy and Petroleum Regulatory Authority (EPRA) is following through on President William Ruto’s pledge to lower diesel prices by a further Sh10 per litre.
Ruto made the commitment on May 22 after negotiations with transport stakeholders ended a threat of renewed nationwide strike action that had been suspended following a two-day lockdown that paralysed sections of the economy.
The review comes against the backdrop of the sharpest fuel increase in the May-June cycle, which saw diesel prices in Nairobi jump by Sh46.29 per litre to Sh242.92, while petrol rose by Sh16.65 to Sh214.25.
The increases sparked outrage among transport operators, who warned that the surge would cascade through the economy by raising the cost of moving goods, food and passengers.
Seeking to calm tensions, Ruto met industry representatives in Mombasa and pledged additional interventions to cushion consumers and businesses from escalating energy costs.
The President argued that the government remains committed to reducing fuel costs despite mounting global pressures linked to the US-Iran conflict and uncertainty surrounding the Strait of Hormuz, a critical shipping route whose disruption has contributed to recent spikes in global oil prices.
The government defended its fuel stabilisation measures, citing Sh13.74 billion deployed through the Petroleum Development Fund and the reduction of VAT on petroleum products from 16 per cent to 8 per cent.
Ruto maintained that the interventions had helped moderate the impact of global oil price volatility and that diesel prices had already fallen by more than Sh85 per litre over successive review cycles.
Hormuz reopening
Whether that relief is reflected in Sunday’s pricing decision remains the central question for consumers and businesses already grappling with elevated operating costs.
The prospect of a diplomatic breakthrough between Washington and Tehran has also introduced a new variable into the fuel pricing outlook.
US President Donald Trump said on Saturday that a new agreement with Iran was expected to be signed on Sunday and would lead to the immediate reopening of the Strait of Hormuz, a key artery for global oil shipments.
“The Strait of Hormuz will be open to all shipping immediately after the signing,” Trump said, adding that the agreement would ensure that “Iran will not have a nuclear weapon.”
While Kenya’s June-July review will largely reflect international prices and exchange rates from the previous pricing window, any sustained easing of tensions in the Gulf could improve market sentiment and provide relief in subsequent fuel pricing cycles.
The review is also unfolding amid growing divergence in how East African countries are managing fuel market shocks.
Price swings
Tanzania has continued to lean heavily on subsidies to shield consumers from global price swings.
However, despite maintaining support estimated at about Sh534 per litre, the country still recorded an increase in diesel prices during its June 3 pricing cycle, highlighting the rising fiscal burden of sustaining fuel subsidies in a volatile market.
Rwanda has taken a different approach, implementing a more direct pass-through of global costs.
In its June 5 review, diesel prices rose by the equivalent of about Sh64 per litre under a hybrid pricing model that offers limited cushioning while allowing international market movements to be reflected more quickly at the pump.
Kenya, by comparison, continues to operate a largely cost-reflective pricing regime supplemented by targeted tax relief and occasional stabilisation interventions.
While the approach protects public finances from the heavy burden of subsidies, it leaves consumers more exposed to fluctuations in international oil markets, exchange rates and landed fuel costs.
Business groups have warned that the consequences of last month’s fuel increase are already being felt across the economy.
Cunsumer price impact
The Kenya National Chamber of Commerce and Industry (KNCCI) estimated a 10 to 20 per cent rise in transport and logistics costs, warning that manufacturing and agricultural distribution costs could increase by between 5 and 12 per cent as businesses pass higher fuel expenses through their supply chains.
KNCCI also projected increases of between 3 and 7 per cent across a range of goods and services, impacting consumer prices.
The lobby said micro, small and medium-sized enterprises are particularly vulnerable, warning that profit margins could shrink by as much as 15 per cent due to limited financial buffers and high exposure to fuel-driven operating costs.
According to the chamber, May’s diesel increase intensified a cost shock that has been building since the start of the year.
Rationalisation of fuel taxes
It noted diesel prices had risen by more than 42 per cent since January, affecting virtually every segment of the economy, from freight transport and agriculture to manufacturing and retail trade.
KNCCI urged the government to rationalise fuel taxes and levies, improve transparency in EPRA’s pricing formula and address inefficiencies in fuel importation, storage and distribution that contribute to higher pump prices.
The lobby also called for greater investment in regional refining capacity and diversification of fuel supply sources to reduce Kenya’s exposure to external market disruptions.
As EPRA prepares to unveil the new prices, the announcement will serve as an important test of the government’s ability to balance consumer relief, inflation management and fiscal sustainability.
It will also indicate whether the commitments made to transport operators following last month’s unrest are beginning to translate into tangible savings for diesel users.
With diesel remaining the backbone of Kenya’s transport and production sectors, even a modest reduction could ease pressure on businesses and households.
Conversely, another increase would likely reignite concerns over inflation, competitiveness and the cost of living at a time when many consumers are already feeling the strain of higher prices.
Beyond the immediate pricing decision, markets will also be watching whether the anticipated US-Iran agreement and the promised reopening of the Strait of Hormuz translate into lower global oil prices in the weeks ahead.
Sunday’s review is therefore not only a test of the government’s pledge to deliver diesel relief but also an early indication of how quickly global geopolitical developments can filter through to prices at the pump.