Pump prices have hit a historic high with a litre of diesel jumping by Sh46.29 to retail at Sh242.92 effective Thursday midnight as consumers take a hit from the US-Israel war on Iran.
A litre of petrol will jump to Sh214.25, reflecting a rise of Sh16.63 while that of kerosene remains unchanged at Sh152.78. Prices of diesel and petrol would have been higher had the State not applied the subsidy. The prices will be in place for a month to June 14.
The steep prices come despite a Sh15.67 subsidies per litre of diesel and Sh98.60 per litre of kerosene. Petrol prices have not been subsidised as the State opts to reduce the burden on an Exchequer already grappling with subsidy arrears estimated at Sh17 billion.
The surge in pump prices reflects the impact of the US-Israel war on Iran, which triggered a global rally in fuel prices in March and last month amid thinning supplies and the blockade of the Strait of Hormuz.
Prices of Brent crude hit a four-year high of $126.41 (Sh16,325.85) a barrel in April amid the escalation in the Middle East conflict. Brent crude is the global benchmark for prices.
The historic high pump prices are set to trigger fresh inflationary pressure and further drive the cost of services and goods. Inflation hit a high of 5.7 percent last month in the wake of costly fuel.
Diesel is the major fuel running the Kenyan economy and farmers, power producers, public service transporters and manufacturers of goods will factor in the increased fuel prices, in the final prices of their goods and services.
Kenya currently imports fuel under the Government-to-Government (G-to-G) and the suppliers had already warned of escalating prices of the fuel supplied.
Constrained supply in the global market coupled with a logistical nightmare following Iran’s blockade of the Strait of Hormuz triggered a surge in prices of fuel in the global market.
Aramco Trading Fujairah (ATF), which is one of the three suppliers to Kenya in the G-to-G had warned said that six cargoes of diesel will be priced at higher rates in the wake of supply disruptions from the Iran war.
‘Sourcing from these alternative locations will extend delivery timelines and when combined with the current elevated price environment will directly and materially affect the prices at which we source our cargoes,’ ATF said in a letter to the government of Kenya in a letter dated April 1, 2026.
‘We are of the view that the events constitute a ‘MAC Event’ as defined under the Master Framework Agreement. We would like to formally request that the prices of the following upcoming shipments be amended as follows.’
Abu Dhabi National Oil Company (Adnoc) and Emirates National Oil Company (Enoc) are the other Gulf oil majors supplying fuel to Kenya on a credit period of 180 days. The deal started in March 2023 and is expected to lapse in the first quarter of 2028.
ATF has been forced to source diesel, petrol and kerosene meant for Kenya from other sources including India in a bid to avoid the disruptions caused by the Iran war. The fuel was mainly sourced from ports in the Gulf region before the war broke out.
Iran blockaded the Strait of Hormuz in February, which coupled with attacks on major refineries in the Gulf region, have significantly disrupted fuel supplies to the rest of the world.
Nearly a quarter of the fuel meant for the global market passes through the Strait of Hormuz, highlighting why its closure has hit the fuel supply chains.
The skyrocketing global prices of fuel have forced most countries to temporarily waive taxes in a bid to cushion consumers from costly fuel.
Kenya was forced to halve the Value Added Tax (VAT) on fuel to eight percent last month as part of efforts to contain the prices.
But the latest prices are likely to spark public outcry over the heavy taxation of fuel even as other countries ease levies on the commodity.
Kenya charges seven levies and two taxes on fuel, making it one of the countries with the highest taxation on fuel in the world.
These are VAT, Roads Maintenance Levy of Sh25 per litre of diesel and petrol, excise duty, anti-adulteration levy of Sh18 per litre of kerosene, import declaration fee and railway development levy.
Others are the Petroleum Development Levy of Sh5.40 for every litre of petrol and diesel and Sh0.40 on kerosene, merchant shipping fee and petroleum regulatory levy.
South Africa suspended fuel levy for one month while Namibia halved taxes on the commodity for three months. Zambia suspended excise duty and zero-rated VAT on petrol and diesel for three months. The changes took effect on April 1.