Kenya’s October fuel-price increases reflect a surge in imported petroleum costs, but the price motorists pay is also shaped by the exchange rate, taxes, transport costs and a monthly regulatory formula. Understanding those moving parts is essential to judging when international price relief should reach the pump.
By The Ledger Africa Editorial Desk
Kenyan motorists have a straightforward question when international oil prices fall: why does the price at the pump not fall by the same amount?
The answer begins with a distinction that is often lost in public debate. The international price of crude oil is not the same as the price Kenya pays for imported petrol, diesel and kerosene. Nor is the import price the same as the final retail price.
The Energy and Petroleum Regulatory Authority (EPRA) sets maximum wholesale and retail prices under the Energy (Petroleum Pricing) Regulations, 2022. Its formula takes account of imported-product costs and a series of domestic charges, taxes and permitted margins.
The latest review illustrates how those components can combine to produce a substantial increase. From 15 October to 14 November 2026, Nairobi’s maximum price for super petrol rose by KSh12.93 a litre to KSh226.96. Diesel increased by KSh9.90 to KSh227.76, while kerosene rose by KSh28.49 to KSh219.87.
The increases followed a sharp rise in the cost of imported petroleum products. But explaining them requires more than pointing to a crude-oil chart. It means examining what Kenya bought, how much it cost to bring those products into the country, how the currency moved and what the pricing formula added before fuel reached consumers.
Crude oil is only the beginning
Kenya’s dependence on imported petroleum exposes its fuel prices to international supply disruptions, but the price of crude is only one influence on the final bill.
Crude oil must be refined into products that meet specific fuel standards. The international prices of petrol, diesel and kerosene can move differently from crude, depending on refinery capacity, product demand, inventories and shipping costs.
Kenya’s October figures demonstrate the distinction. EPRA reported that the average landed cost of imported super petrol rose by 11.81%, from US$874.26 per cubic metre in August to US$977.55 in September. Diesel increased by 11.32%, from US$957.05 to US$1,065.38, while kerosene rose by 9.41%, from US$1,003.87 to US$1,098.31.
Edward Mwirigi Kinyua, EPRA’s director-general, described September as “the worst month ever since this crisis broke”, according to The Star’s report of his October 14 briefing.
He also said the international price of super petrol had climbed to US$1,300 per metric tonne, from about US$600 when the Middle East crisis began. The figures describe a sharp rise in the cost of fuel imports, although they should not be confused with a direct measure of crude-oil prices.
The distinction matters. A decline in crude prices does not guarantee an equivalent fall in imported petrol or diesel. For Kenyan motorists, the more useful indicator is the cost of the refined products entering the country.
The shilling adds another layer
Petroleum imports are priced in dollars, making the exchange rate another determinant of their cost in Kenya shillings.
EPRA’s data put the average dollar exchange rate at KSh129.91 in September, compared with KSh129.72 in August. The shilling’s movement over that period was small relative to the rise in landed fuel costs, suggesting that the increase in the dollar cost of imported products was the more important immediate pressure.
That distinction is important when explaining a particular price review. The exchange rate can amplify or offset movements in international product prices, but its actual contribution should be calculated rather than assumed.
For example, a 10% fall in the dollar price of an imported product would not translate into a 10% reduction in its shilling cost if the shilling weakened over the same period. Conversely, a stronger shilling could help lower import costs even if dollar prices changed little.
The impact extends beyond filling stations. Fuel is an input into road transport, freight, farming, manufacturing and distribution. Higher costs can put pressure on fares and the prices of goods, although the extent and timing depend on competition, contracts and the ability of businesses to absorb additional expenses.
Why relief takes time to reach the pump
Kenya’s pricing system does not adjust retail prices every time the international market moves.
EPRA calculates landed costs using a weighted average of qualifying petroleum cargoes discharged at Mombasa from the 10th day of the preceding month to the 9th day of the pricing month. It publishes the maximum wholesale and retail prices monthly, on the 15th.
The calculation therefore reflects the relevant cargoes and pricing period, not every daily movement in crude oil or refined products.
Energy Cabinet Secretary Opiyo Wandayi explained the lag in a statement reported by People Daily: “each cargo is priced on the previous month’s benchmarks” under the M1 pricing rule.
That timing can delay the benefit of falling international prices. If imported products entering the calculation were purchased at higher prices, a subsequent decline in the market may not immediately reduce the regulated price.
The same principle applies in reverse. A sharp increase in international costs can take time to feed through the monthly calculation.
The lag alone does not demonstrate that the system is unfair. The relevant questions are whether the correct cargoes and benchmarks have been used, whether the costs are properly calculated and whether the published formula has been applied as required.
Taxes can soften a shock, but they cannot erase it
The pump price also reflects domestic policy. EPRA’s formula includes wholesale and retail margins, transportation from secondary depots to filling stations and applicable value-added tax. Other approved cost components are reflected in the wholesale price calculation.
A reduction in tax can offset some of an increase in import costs. But it cannot guarantee lower pump prices if the rise in imported-product costs is greater than the relief provided.
The government reduced VAT on petrol, diesel and kerosene from 16% to 8% in April 2026. The lower rate remained in place for the October pricing period, according to EPRA and contemporary reporting.
Kinyua said the reduction was intended “to cushion consumers from the adverse effects” of higher international prices.
The October increase shows the limits of that intervention. Prices rose despite the lower VAT rate because imported fuel costs had increased sharply. The size of the tax relief and the amount of the import-cost increase must be examined separately to establish their respective contributions.
There is also a public-finance trade-off. Tax relief reduces the immediate burden on consumers but forgoes revenue that the government might otherwise collect. Whether it is the most effective response depends on the scale and duration of the shock, the fiscal cost and who benefits from the reduction.
The stabilisation question
Kenya has also used the Petroleum Development Levy Fund to help smooth fuel-price increases. The fund provides a mechanism for cushioning consumers when import costs rise, but its resources are finite.
In a report published on October 15, Pulse Kenya said EPRA had decided not to draw on the fund for the latest price review, partly because the regulator anticipated further pressure on prices in November and December. It reported that Kinyua said the government had spent KSh29.4 billion on price stabilisation during the 2025/26 financial year, including KSh24.3 billion between April and June 2026.
The decision raises a question about the purpose of a stabilisation fund: should it be used to cushion a sharp increase immediately, or preserved against the possibility of an even more expensive period ahead?
There is no cost-free answer. Using the fund reduces the immediate burden on motorists but leaves fewer resources for a later shock. Preserving it offers a buffer for the future while requiring consumers to absorb more of the present increase.
The decision should be judged against the fund’s available balance, the expected scale of future costs and the government’s other fiscal obligations. The current balance was not disclosed in the reporting cited here, limiting an independent assessment of whether the decision represented prudent preparation or excessive caution.
Why kerosene rose more sharply
Kerosene recorded the largest increase in Nairobi during the October review, rising by KSh28.49 a litre. That was considerably more than the KSh12.93 increase in super petrol and the KSh9.90 increase in diesel.
The difference reflects the distinct landed-cost movements and pricing components of each product. EPRA also considers the price gap between kerosene and automotive fuels because large differences can create incentives for adulteration, in which cheaper products are mixed with other fuels.
Kinyua said the regulator was considering the risk of fuel adulteration when setting prices, according to The Star.
That explanation deserves scrutiny alongside the cost figures. Preventing adulteration is a legitimate regulatory objective, but the effect of a price adjustment on low-income households that depend on kerosene also matters. The public needs to understand how the regulator weighs those competing considerations.
The sharp rise should therefore not be explained solely by a general increase in global oil prices. The product-specific landed costs, applicable taxes and other elements of the calculation are necessary to establish the reasons for the difference.
Supply security is not the same as price stability
The government has also sought to reassure consumers that higher prices do not mean Kenya is running out of fuel.
In an October 13 statement reported by The Star, Wandayi said: “Through all of this, Kenya’s fuel supply has remained uninterrupted.”
The distinction is important. A country can maintain adequate physical supplies while paying substantially more for them. Cargoes may arrive on schedule even as international disruption increases freight, insurance and product costs.
Wandayi said Kenya’s government-to-government petroleum sourcing arrangement had helped maintain deliveries during disruption to international supply routes. He also argued that fixed charges under the arrangement offered some protection against rising market costs.
Assessing that claim requires examining the relevant contract terms and comparing Kenya’s actual costs with appropriate market benchmarks. The existence of a supply agreement does not, on its own, establish how much it saves consumers.
Nor does uninterrupted supply guarantee affordable fuel. Security of supply and affordability are separate tests of the petroleum system.
The numbers the public should watch
Kenya’s monthly pump-price review gives consumers a starting point for assessing fuel costs. But the maximum retail price is the outcome of a calculation, not a complete explanation of it.
The most useful public disclosure would show how the landed cost, exchange rate, taxes, transport costs and permitted margins changed between pricing periods. It would also explain any use of the stabilisation fund and identify the assumptions behind forecasts of future costs.
That would allow motorists and businesses to distinguish the impact of international markets from domestic policy decisions. It would also make it easier to test official explanations against the underlying numbers.
For the October review, the available figures establish that imported-product costs rose sharply and that the increase differed across petrol, diesel and kerosene. They do not, without a complete reconciliation of the cost components, establish precisely how much each factor contributed to the final pump price.
The next review will provide another test. If international product prices ease, the shilling remains broadly stable and landed costs decline, consumers should be able to see how much of that relief reaches the regulated price and when.
Global oil prices remain an important signal. They are not the whole story. Kenya’s fuel bill is ultimately determined by the cost of the products it imports, the currency in which it pays, the domestic charges applied and the rules governing the final price.
