Diesel Prices Hit Record High as Kenya Faces Steep Fuel Cost Surge

2026-05-14 region

Nairobi, 14 May 2026
Kenya’s fuel costs have reached unprecedented levels, with diesel jumping a staggering 23% to Sh242.92 per litre—the highest on record. The Energy and Petroleum Regulatory Authority announced these increases effective 15 May, driven by global oil market volatility linked to Middle Eastern conflicts and supply chain disruptions. Despite government subsidies totalling Sh5 billion, petrol prices rose by Sh16.65 to Sh214.25 per litre. The dramatic price surge stems from international crude oil reaching four-year highs and supply disruptions affecting Kenya’s fuel imports, promising significant impacts on transport costs and essential commodity prices across the country.

Government Subsidies Fail to Shield Consumers from Sharp Price Increases

The government has deployed approximately Sh5 billion from the Petroleum Development Levy Fund to subsidise diesel and kerosene prices during the current pricing cycle, yet consumers still face substantial increases [1][4]. During the previous cycle from 15 April to 14 May 2026, the state provided even more extensive subsidies, with super petrol subsidised by Sh4.68 per litre, diesel by Sh23.92 per litre, and illuminating kerosene by a remarkable Sh96.56 per litre [5]. The total subsidy payments for this period reached Sh951.3 million for petrol, Sh4.87 billion for diesel, and Sh199.7 million for kerosene [5]. Despite these interventions, the current price surge demonstrates the limits of government cushioning against volatile international markets.

International Market Pressures Drive Unprecedented Cost Increases

The sharp price increases stem from dramatic rises in the average landed cost of imported petroleum products during April 2026 [1]. Super petrol costs surged by 10.077 per cent from US$823.27 per cubic metre in March to US$906.23 in April [1]. Diesel recorded the most severe impact, with costs jumping by 20.316 per cent from US$1,073.82 to US$1,291.98 per cubic metre, whilst kerosene increased modestly by 1.585 per cent from US$1,311.93 to US$1,332.73 per cubic metre [1]. These increases reflect broader global energy market disruptions, with Brent crude oil reaching a four-year high of $126.41 per barrel in April 2026 [3].

Regional Conflicts and Supply Chain Disruptions Fuel Crisis

The price surge traces back to geopolitical tensions and supply disruptions linked to the US-Israel war on Iran, which triggered a global rally in fuel prices during March and April 2026 [3]. Iran’s blockade of the Strait of Hormuz in February 2026 significantly disrupted global fuel supplies [3]. Aramco Trading Fujairah, Kenya’s fuel supplier under the Government-to-Government arrangement, formally warned in a letter dated 1 April 2026 that six cargoes of diesel would face higher pricing due to supply disruptions [3]. The company stated that sourcing from alternative locations would extend delivery timelines and directly affect pricing, constituting what they termed a ‘MAC Event’ under their Master Framework Agreement [3].

Transport Costs and Essential Commodities Face Immediate Impact

The fuel price increases will trigger immediate rises in transport fares and basic commodity costs, adding pressure to consumers already grappling with elevated living expenses [1]. Current inflation reached 5.7 per cent in April 2026, driven primarily by rising fuel costs [3]. The new pricing structure, effective from midnight on 15 May until 14 June 2026, applies comprehensive taxation including the recently reduced 8 per cent VAT on petroleum products, implemented through Legal Notice No. 70 dated 15 April 2026 [1][5]. Regional price variations show Mombasa offering the most affordable fuel at Sh211.09 for petrol and Sh239.64 for diesel, whilst Nakuru prices stand at Sh213.15 for petrol and Sh242.33 for diesel [4]. The pricing formula incorporates international crude oil prices, exchange rate fluctuations, taxes, transport, storage, distribution costs, and statutory margins under Kenya’s regulated petroleum pricing framework [7].

Bronnen

fuel prices transport costs