ANNET NERIMA
What You Need to Know
The ongoing US-Israel conflict is exerting pressure on global energy markets, with significant implications for countries like Kenya. Despite being geographically distant, Kenya’s reliance on oil imports means that fluctuations in global prices directly affect its economy, leading to potential increases in the cost of living and transport.
Africa-Press – Kenya. The US-Israel war on Iran is once again putting global energy markets under pressure.
Geographically, the conflict can be considered to be far from Africa, but its effects can still reach countries like Kenya in direct and painful ways. Wars travel through markets and into the daily lives of ordinary people who have no roles in them.
One of the biggest risks lies in the Strait of Hormuz, a narrow but critical waterway between the Persian Gulf and the rest of the world. About one-fifth of the global oil supply passes through this route. Any disruption, whether from attacks, threats or military build-up, can quickly push oil prices higher. Even the fear of disruption is enough to shake markets.
Countries like Kenya, which depend on imports, feel the impact almost immediately when oil prices rise. Kenya does not produce enough oil to meet its needs. As such, it relies heavily on imports. This means global shocks are quickly passed on to the local economy.
There are already signs of pressure. Oil prices have remained volatile in recent weeks, driven by fears of supply disruptions and insecurity in key shipping routes. Analysts warn that even small interruptions can lead to sharp increases in prices.
This week, the price of the benchmark Brent crude oil soared to nearly $120 per barrel, close to its record high of $147 in July 2008. Brent crude is primarily used as the global benchmark for pricing, and it is heavily refined into high-demand products such as diesel and kerosene. For countries with limited buffers, these increases can be difficult to absorb.
For now, Kenya has not experienced a sudden spike in fuel prices. According to the Energy and Petroleum Regulatory Authority, pump prices have remained relatively stable in the latest pricing cycle. But this calm may not last for long.
Fuel prices affect almost every part of the economy. When they rise, transport costs go up. This makes it more expensive to move goods across the country. Food prices increase as farmers and traders pass on higher costs. In the end, households bear the burden through higher cost of living.
Global oil shocks have repeatedly triggered economic stress in countries dependent on imports. In 1973, an oil embargo by major producers caused prices to surge and led to widespread inflation. Another shock followed in 1979 after the Iranian Revolution disrupted supply. Decades later, between 2003 and 2008, oil prices rose sharply again.
Kenya has made progress in reducing some forms of energy risk. Today, a large share of the country’s electricity comes from renewable sources such as geothermal, hydropower, wind and solar.
However, this progress has not fully solved the problem. Kenya still depends heavily on petroleum, especially in transport and agriculture. Most vehicles on the road still run on petrol or diesel. Many farming activities rely on fuel-powered machinery or transport. This continued dependence means that global oil price shocks still ripple through the economy.
Reducing this vulnerability will require investing in environmentally friendly transport alternatives, such as electric vehicles, to help lower fuel demand over time. Expanding solar-powered irrigation can reduce reliance on diesel in agriculture.
These changes will not happen overnight. They require strong policy support and investment. But they are necessary if Kenya is to build a more resilient economy.
Historically, global oil shocks have had profound effects on economies reliant on imports. The 1973 oil embargo and the 1979 Iranian Revolution are notable examples that led to inflation and economic stress in many countries. More recently, between 2003 and 2008, oil prices surged again, impacting economies worldwide. Kenya, while making strides in renewable energy, still faces challenges due to its dependence on petroleum, especially in transport and agriculture. Addressing this vulnerability is crucial for economic resilience.
Source: The Star
