Fuel shortage: Petrol stations run dry, ration as stock runs low

The impact of the United States and Israeli attack on Iran is starting to hit home, with some fuel stations starting to report dry pumps. Others are rationing the amount of petroleum their customers can buy.

Kenyans had been expecting that the impact would start to bite sooner or later, and other than the high prices of fuel expected starting April 15.

But analysts have warned of likely shortages as well as the adverse effect that high cost and shortages of fuel would have on the economy. 

A spot check by The Standard over the weekend along major arteries in Nairobi indicated that some petroleum outlets, including those branded by oil majors, were without both diesel and super petrol.

Several motorists have also reported that petrol station attendants have been limiting the amount of fuel they can sell to each motorist.

Analysts warn that the worst is yet to come, and Kenyans should brace for continued rationing and even stockouts in the coming weeks. 

The State has been banking on the Government-to-Government (G2G) arrangement it has with Gulf oil firms.

Kenya in March 2023 signed the deals with Saudi Aramco, Abu Dhabi National Oil Company (Adnoc), and Emirates National Oil Company (Enoc) for the supply of diesel, super petrol and kerosene on an extended credit period. 

The deal, which was supposed to reduce the local oil industry’s demand for the US and stabilise the shilling, is what the government now hopes can see the country through the crisis in the Middle East. 

The companies have, however, been experiencing operational and logistical challenges due to the escalating conflict.

“The G2G partners—Saudi Aramco, Adnoc and Enoc—have all been compromised either by direct military strikes or the ensuing logistical blockade of the Strait of Hormuz. Adnoc’s (shutting down its Ruwais refinery) is the most direct blow to Kenya’s supply chain,” said Ngatia Ndung’u, analyst at SM-Intel.

“The impact is immediate and expected to be prolonged. Even if hostilities cease immediately, repairing damaged infrastructure at Ruwais, Shah, and Yanbu (key oil and gas installations that suffered attacks recently), clearing the backlog of vessels, and normalising insurance premiums for Gulf shipping will take months.”

“Kenya must prepare for sustained fuel rationing, significant pump price increases in April and May 2026, and intense pressure on foreign exchange reserves as the import bill doubles,” said Mr Ndung’u.

The cost of oil surged in March, with Murban crude oil prices increasing to $146  (Sh18,980) this weekend, up from about $74 (Sh9,690) a barrel on March 1, which is expected to be seen in the cost of imported petroleum products.

Inevitable crisis

“The landed cost of fuel for Kenya has effectively doubled,” said Ndung’u, adding that the country’s energy sector chiefs should have foreseen the risk of relying on one region for Kenya’s fuel supply and that a more diversified sourcing could have shielded the country from what appears to be an inevitable crisis.

“The current crisis exposes the vulnerability of relying exclusively on a single volatile region. The government is now facing a scenario where it must find alternative suppliers (such as the Dangote refinery in Nigeria) on short notice, likely at spot market prices, undermining the deferred-payment benefits of the G2G arrangement,” he said.

Diversifying Kenya’s fuel sources is however not the only missed opportunity that the country had to could have seen it weather the fuel supply crisis it is facing and strengthen its energy security.

Various analyses show that better management of Kenya’s fuel stabilisation programme, as well as implementation of key projects such as the strategic petroleum reserves, could have left the country in a better position to withstand the shocks.

The Auditor General said in a recent report that the Petroleum Development Levy Fund – the kitty that is used to subsidise pump prices and prevent shock hikes — could have been managed better and cushioned Kenyans a lot more in the coming weeks and possibly months in stabilising pump prices.

In auditing the Petroleum Development Levy Fund for the year to June 2025, the Auditor General noted that the Energy and Petroleum Ministry had failed to act on earlier recommendations to put in place structures to manage the Fund sustainably.

Other than stabilising pump prices, the fund finances other areas generally aimed at further developing the petroleum industry. 

“Review of the status during audit of the fund in 2024/25 revealed that lack of governance framework for stabilisation of petroleum prices remained unresolved as management was still awaiting appearance before the Public Accounts Committee,” said the Auditor General in the report, adding that these are among the issues raised in past years that had not been acted upon. 

“Review of documents relating to the stabilisation programme revealed a letter from the National Treasury dated July 21, 2022, which advised the State Department to form a multi-agency team to review the resource requirement and assess the sustainability of the fuel price stabilisation programme.”

“However, the management did not constitute the task force and continued to make payments towards petroleum price stabilisation. In the circumstances, the existence of mechanisms to guide budgeting and financing stabilisation of the petroleum pump prices programme could not be ascertained.”

The lack of a framework to ensure the sustainability of the subsidy or pump price stabilisation programme could be a pointer that the programme could achieve much more than it currently does. 

Over the year to June 2025, the kitty–managed by the State Department of Petroleum–had Sh25.54 billion, of which Sh24.55 billion was spent on different petroleum development activities. 

About half of the money was spent on oil market stabilisation at Sh13.18 billion. 

About Sh5 billion was transferred to Nock, with the State-run oil marketer sending Sh4.91 billion on recurrent activities and another Sh302 million on development activities. The Petroleum Ministry also transferred Sh3.52 billion to KPRL, which the KPC owned facility spent on recurrent activities.

Other transfers were to Epra (Sh150 million) to support its development budget, while the State Department of Petroleum retained Sh2.38 billion, which it reported as having also been used on development projects.

Petroleum industry players have, in the recent past, noted that Kenya could have set up strategic petroleum reserves that could also have helped the economy to better absorb the incoming shocks. 

The government has, over the years, mulled setting up strategic petroleum reserves but has repeatedly abandoned the plans, which have at times been at advanced stages. 

The reserves could have offered the country a soft landing in scenarios such as the one unfolding in the Middle East. Strategies are giant storage tanks filled up with fuel that the country can tap into to reduce the impact of a sudden spike in fuel prices globally or prevent shortages.

Such fuel is acquired over time and when conditions are ideal, including when global prices drop. The government is required by law to set up the reserves, but has failed to implement them. 

Petroleum Outlets Association of Kenya (Poak) Chairman Martin Chomba, in a recent interview with The Standard, said the lack of strategic oil reserves in Kenya is a major concern.

Had Kenya taken the issue of Petroleum Strategic Reserves seriously, he noted, there would be a level of comfort as the reserves would be able to help absorb any shocks, such as a sudden spike in prices and even shortages.

“We do not have strategic oil reserves. We have a law that requires the Ministry to provide for strategic reserves, but this has never happened. The Petroleum Act of 2019 requires the country to have strategic reserves that would last at the very least 90 days.

But today, the installed capacity that we have cannot take us more than a month if we do not have vessels docking at Mombasa,” he said, speaking on Standard Group’s Spice FM, adding that the county should not “sit and hope that this will ease off in a few weeks.”

“Energy and especially petroleum should be secured. We have to make sure that we position ourselves to be self-sufficient, probably for three to four months.”

The government has for years had plans to set up strategic fuel stocks – which are giant storage tanks – and at some point mandated the National Oil Corporation (Nock) to go about acquiring and maintaining the reserves that could last the country up to 90 days.

The fuel would be stored by the Kenya Pipeline Company (KPC), which would also need to invest in additional storage.