Oil shock looms as State maintains studious silence

The Government has offered little public response to a mounting international crisis that analysts say threatens the country’s import‑dependent fuel supplies, even as a temporary diplomatic reprieve between Washington and Tehran eased energy markets on Monday.

President William Ruto’s administration has not issued a sustained, detailed policy statement on possible impacts to Kenya’s strategic fuel reserves or its energy plans, The Standard found in a review of official communications and briefings. 

A prolonged shock would worsen inflationary pressures and cause additional household pain over higher food and transport prices and complicate fiscal plans for the cash-strapped Ruto government.

Consumer inflation in the country eased slightly from a multi‑year high in recent months, but services and transport costs, sensitive to fuel prices, could reverse that trend, analysts say. 

The International Monetary Fund (IMF) recently urged the Ruto government to prepare contingency measures that protect the vulnerable while avoiding blanket subsidies that fiscal accounts cannot sustain.

The Ruto government’s apparent silence on emergency measures contrasts with the steps taken elsewhere, analysts observed.

Countries, including Pakistan and Thailand, for example, introduced temporary conservation measures such as lower speed limits and deactivating nonessential lifts to manage fuel and power use. 

The world is facing a worse energy crisis than the twin oil shocks of the 1970s and the fallout of the Ukraine war combined, the head of the International Energy Agency (IEA) has warned.

Speaking at a media event in Australia on Monday, IEA Executive Director Fatih Birol said the energy crunch prompted by the US-Israel war on Iran exceeded the 1973 and 1979 oil shocks and gas shortages stemming from Russia’s 2022 invasion of Ukraine put together. 

“This crisis, as things stand, is now two oil crises and one gas crash put all together,” Birol was quoted as saying in remarks to the National Press Club of Australia in Canberra.

On Friday, the Paris-based intergovernmental organisation, which earlier this month announced plans to coordinate the release of 400 million barrels of oil from emergency stockpiles, proposed a series of measures governments could take to reduce energy consumption.

The proposed measures include facilitating more remote working and carpooling, and lowering speed limits on motorways.

“I thought the depth of the problem was not well appreciated by the decision-makers around the world,” Birol said.

Birol said the effective closure of the Strait of Hormuz and attacks on energy facilities had reduced global oil supplies by about 11 million barrels per day (bpd), more than double the combined shortfalls of the 1970s’ crises.

He said liquefied natural gas (LNG) supplies had been reduced by about 140 billion cubic metres, compared with a shortfall of 75bcm in the aftermath of Ukraine’s invasion by Russia.

At least 40 energy facilities across nine countries have also been severely damaged in the conflict, the IEA chief said.

“The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible,” Birol said.

The IEA recommends measures that could reduce national oil consumption, expand remote work, increase public transport use and consider temporary traffic restrictions, options analysts say cash‑strapped governments could consider.

The silence by Kenyan officials comes after two days in which US President Donald Trump said Washington and Tehran had held “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.” 

Trump said he had ordered US forces to halt planned strikes on Iran’s energy infrastructure for five days, a pause that traders and some analysts said temporarily reduced the risk of a major supply shock.

The announcement arrived as a 48‑hour deadline Mr Trump had set for Iran to reopen the Strait of Hormuz expired. 

Earlier, Iran’s Supreme National Defence Council warned that any attempt to attack the Iranian coast or islands would result in “all communication lines in the Persian Gulf to be mined.”

“Markets breathed a small sigh of relief” after the US remarks, said a Nairobi‑based energy analyst who asked not to be named. 

Brent crude fell to about $96 a barrel on Wednesday, roughly 13 per cent below session highs, though traders cautioned volatility could return quickly if talks falter.

Kenya imports the bulk of its refined fuel needs, including Murban crude derivatives, from Gulf suppliers under a 2023 government‑to‑government (G2G) arrangement. 

Those supplies have been threatened by attacks and counter‑measures that disrupted traffic through the Strait of Hormuz, the chokepoint through which about one‑fifth of global oil flows, according to the International Energy Agency (IEA). 

State‑owned and Gulf‑based suppliers crucial to Kenya’s imports, Saudi Aramco, ADNOC and ENOC, have faced operational disruption. ADNOC declared force majeure at certain facilities after drone strikes, and shipping insurers raised premiums on Gulf routes. 

The firms did not reply to The Standard’s requests for comment.

Kenyan officials have made brief public remarks aimed at reassurance. Energy Cabinet Secretary Opiyo Wandayi said there was “no cause for alarm,” but provided no detailed contingency measures.

The Standard found no follow‑up policy paper from the ministry outlining steps to shore up supplies. The Energy and Petroleum Regulatory Authority (EPRA) kept retail fuel prices unchanged in mid‑March after reviewing margins and taxes.

Kenya maintains a statutory strategic fuel buffer equivalent to about 21 days of consumption, EPRA data and government documents show. 

But the IEA and local analysts warn that calculation methods and drawdowns can make such buffers erode faster than headline figures imply if supply chains are interrupted. “Strategic reserves are a blunt instrument if supply is curtailed and alternative supply chains are not immediately available,” said Ian Njoroge, a Nairobi‑based economist.

Analysts expect growing pressure for public government action as supply disruptions loom. 
“Silence can be a policy for a short time, but it is not a long‑term strategy in a crisis that directly touches households,” said Njoroge.

The Petroleum Outlets Association of Kenya (POAK) has received reports of “stock‑outs” in rural areas and said some major suppliers had begun rationing allocations to outlets, though the situation varied by county. 

Some officials told The Standard contingency planning is occurring within the Energy ministry and relevant agencies, but declined to release details, saying public disclosures could “spook markets” and weaken negotiating positions with suppliers. 

“We are in touch with international partners and existing suppliers. We are not going to comment on operational details in public,” one senior official said on condition of anonymity.

Sourcing alternative supplies would carry high financial costs. Buying cargoes on the open market typically requires large, upfront US dollar payments, eroding the benefits of deferred‑payment G2G terms and pressuring Kenya’s forex reserves. 

Officials and private sources said exploratory talks had been held with regional refiners, including Nigeria’s Dangote refinery, but logistics and finance posed barriers to rapid diversions.

Investors and market watchers view the five‑day pause as a reprieve rather than a durable de‑escalation.

 “It gives players time to breathe and for talks to continue, but it doesn’t remove the underlying risk,” said Njoroge. If the pause expires without durable arrangements to secure maritime routes and repair damaged infrastructure, price and supply shocks will likely return.

Iran’s earlier threats of wide retaliation if the US strikes targeted Iranian territory amplified the risk. 

Multiple regional energy executives say infrastructure damage across the Gulf and Red Sea could take months to repair, even if hostilities cease. Repair timelines and insurance considerations remain key variables for resuming normal shipping patterns analyst say. 

Some Kenyan businesses are preparing. They include logistics firms, some of which said they are modelling higher freight and distribution costs, and major retailers are readying inventory reallocation if supply patterns shift. 

Transport unions warned that higher diesel prices could force fare hikes by Matatu operators and potentially trigger industrial action. 

For ordinary Kenyans, immediate impacts would be felt at the pump and in transport fares, analysts say.