The Energy and Petroleum Regulatory Authority (EPRA) Director-General Edward Kinyua says September 2026 was the worst month for fuel trade since the Middle East crisis began. He warns that Kenya could see record increases in fuel prices as the country heads towards the busy festive period.
The increase in the cost of importing refined petroleum products has exposed Kenya’s vulnerability to geopolitical shocks in global energy markets, raising fresh concerns about transport fares, the cost of essential goods and the broader inflation outlook.
According to figures presented by EPRA, the average landed cost of imported super petrol rose by 11.81 per cent, from $874.26 per cubic metre in August to $977.55 in September. Diesel import costs also increased by approximately 11.3 per cent, intensifying pressure on an economy that relies heavily on petroleum for transportation, manufacturing, agriculture and distribution.
“September has been the worst month ever since this crisis broke,” Kinyua said, highlighting the scale of the external shock confronting Kenya and other fuel-importing economies.
The remarks came as the government sought to cushion consumers by reducing value-added tax (VAT) on super petrol, diesel and kerosene from 16 per cent to 8 per cent. However, the latest price increases demonstrate the limits of domestic tax measures when international fuel costs rise sharply.
EPRA DG Edward Kinyua Explains the Surge in Fuel Import Costs
The figures cited by EPRA DG Edward Kinyua reveal how rapidly international market conditions have changed since the Middle East crisis began.
The average landed cost of super petrol increased from $874.26 per cubic metre in August to $977.55 in September 2026 represents an increase of $103.29 per cubic metre in a single month.
Diesel recorded a similarly significant increase, with its average landed cost rising from $957.05 to $1,065.38 per cubic metre, equivalent to an increase of approximately 11.32 per cent. Kerosene import costs also rose by 9.41 per cent, from $1,003.87 to $1,098.31 per cubic metre, according to figures reported following EPRA’s announcement.
The increases matter because landed costs reflect the price of bringing petroleum products into the country, including the relevant import and freight-related expenses. They are an important component of the final price paid by motorists and businesses, although retail prices also incorporate taxes, levies, distribution expenses and other regulated costs.
Kinyua further noted that international super petrol prices had climbed to approximately $1,300 per metric tonne, from about $600 when the crisis began.
That comparison illustrates the severity of the disruption. It also explains why a reduction in domestic taxes may not be sufficient to prevent increases in pump prices when the underlying cost of imported fuel rises substantially.
Why the Middle East Crisis Matters to Kenya
Kenya’s exposure to international petroleum markets means that conflicts thousands of kilometres away can have immediate consequences for households and businesses.
When geopolitical tensions threaten oil production, refining capacity or shipping routes, international prices can rise as traders factor in the possibility of supply shortages. Freight charges and insurance premiums may also increase when vessels face greater risks or are forced to use alternative routes.
The conflict involving Iran and other regional actors has disrupted energy markets, raised oil prices and increased shipping costs. These pressures can affect importing economies even when their domestic fuel consumption and production conditions have not changed significantly.
Importers now face higher costs when purchasing petroleum products abroad. Those costs feed into the domestic pricing system, potentially increasing the price of petrol, diesel and kerosene.
The consequences extend beyond motorists. Diesel powers many commercial vehicles, agricultural machines, generators and industrial operations. Petrol is an important cost for private motorists, motorcycle taxi operators and some small businesses, while kerosene remains relevant to households that rely on it for cooking or lighting.
The economic challenge is therefore not simply that fuel becomes more expensive. It is that fuel is an input into the production and distribution of numerous other goods and services.
A sustained increase can raise the cost of moving food from farms to markets, transporting construction materials, delivering manufactured products and operating businesses that depend on generators. If companies pass those expenses to customers, the initial energy shock can gradually spread through the wider economy.
Why the VAT Reduction May Not Fully Protect Consumers
EPRA DG Edward Kinyua said the government reduced VAT on super petrol, diesel and kerosene from 16 per cent to 8 per cent to cushion consumers against the adverse effects of rising international prices.
The intervention is significant because VAT directly affects the tax component of fuel prices. Reducing the rate can lower the amount of tax charged relative to what would otherwise apply, helping to moderate the impact of higher import costs.
However, the distinction between cushioning consumers and eliminating a price increase is important.
A tax reduction cannot automatically offset every increase in the underlying cost of imported petroleum. If the international price rises sufficiently, the benefit from lower VAT may be outweighed by the increase in the cost of bringing fuel into Kenya.
The policy also presents a fiscal trade-off. Lower VAT can provide immediate relief to consumers and businesses, but it reduces the revenue collected from fuel sales compared with what would have been collected under the higher rate, all else being equal.
This creates a difficult balancing act for the government. Households need protection from rising living costs, businesses need predictable operating expenses, and the Treasury must maintain sufficient revenue to finance public services and meet its financial obligations.
The effectiveness of the intervention should therefore be assessed by examining how much of the international price increase is absorbed through lower taxes, how much reaches consumers and what the measure costs in foregone public revenue.
The wider question is how long such relief can be sustained if global petroleum prices remain elevated.
Transport Operators Face Pressure as Fuel Costs Rise
The warning from EPRA DG Edward Kinyua has particular significance for Kenya’s transport sector, where fuel is one of the most visible operating expenses.
Matatu operators, taxi drivers, motorcycle taxi riders, freight companies and public transport businesses must manage fuel alongside vehicle maintenance, insurance, financing costs, wages and regulatory expenses.
When pump prices rise, operators have several possible responses. They can absorb the increase by accepting lower margins, improve operational efficiency, reduce other expenses where possible or seek to recover part of the additional cost through higher fares.
Each option has limitations.
Operators working on thin margins may struggle to absorb a sustained increase in fuel expenses. However, increasing fares can also reduce demand, particularly among passengers who are already facing pressure from food prices, housing expenses and other essential costs.
This creates a difficult relationship between transport operators and commuters. Operators need fares that cover the cost of providing services, while passengers need affordable transport to reach workplaces, schools, hospitals and markets.
If fare increases become widespread, the consequences can extend beyond the transport industry. Commuters may spend more of their income travelling, leaving less available for other household needs. Businesses may also face pressure to increase wages or absorb additional costs associated with moving employees and goods.
Freight operators face a related challenge because higher diesel costs can influence the price of transporting agricultural produce, consumer goods and industrial inputs. Where businesses cannot absorb these costs, some of the increase may eventually appear in retail prices.
The extent of the impact will depend on the size and duration of the fuel-price increase, the ability of operators to improve efficiency and the willingness of customers to pay higher fares or prices.
The Inflation Risk Extends Beyond the Petrol Station
One of the most important implications of rising fuel import costs is the risk that energy inflation spreads into other parts of the economy.
Fuel-price increases can affect inflation directly through the cost of petrol, diesel and kerosene. They can also influence prices indirectly by raising the cost of transportation, production and distribution.
Food markets are particularly exposed to this second channel. Farmers require fuel for machinery and transportation, while traders rely on vehicles to move produce between rural production areas, wholesale markets and urban consumers. An increase in transport expenses can therefore place upward pressure on food prices, although weather conditions, supply volumes, storage costs and other factors also influence the final price.
Manufacturers face similar pressures when fuel and transportation account for a significant share of their operating expenses. Companies that use diesel generators during electricity interruptions may experience additional cost increases if they must purchase fuel at higher prices.
If these pressures persist, businesses may pass some of the additional costs to consumers. Alternatively, they may accept lower profit margins, reduce spending or postpone investment. The outcome will vary across sectors depending on competition, demand and the ability to substitute other inputs for petroleum.
The concern for policymakers is that an initially external price shock can become a broader cost-of-living problem if it persists long enough to affect many sectors.
Nevertheless, higher fuel import costs do not automatically translate into an equivalent increase in overall inflation. The final outcome depends on how much of the shock reaches domestic prices, the strength of consumer demand, exchange-rate movements and the duration of the international disruption.
What the Fuel Crisis Reveals About Kenya’s Energy Vulnerability
The latest figures highlight a structural challenge for Kenya: the domestic economy remains exposed to international petroleum prices over which local authorities have limited direct control.
EPRA regulates maximum retail petroleum prices under Kenya’s legal framework, but it cannot independently determine the international prices at which imported fuel is purchased. The regulator can explain changes in import costs and calculate regulated pump prices, while the government can use taxation and other policy measures to influence the amount ultimately paid by consumers.
This distinction matters when evaluating public responses to fuel-price increases. A government may moderate the domestic impact of an international shock, but it cannot guarantee that global supply disruptions will have no effect on local prices.
Reducing long-term exposure requires a broader approach. Improving public transport efficiency, expanding reliable electricity supply, supporting electric mobility where economically viable and reducing unnecessary fuel consumption can gradually lower petroleum demand in some sectors.
Kenya’s renewable electricity resources also offer opportunities to reduce reliance on petroleum for selected energy uses. However, electricity generation and transport are different parts of the energy system, and a relatively renewable electricity mix does not eliminate the country’s need to import liquid fuels for road transport, aviation and other applications.
The transition will take time and require investment in infrastructure, vehicles, charging networks and reliable electricity distribution. In the meantime, petroleum will remain an important input into the economy, making effective price regulation and transparent fiscal decisions essential.
What Consumers and Businesses Should Watch Next
The next phase of the fuel-price shock will depend on developments in international oil markets and the extent to which higher import costs persist.
Consumers should monitor EPRA’s official monthly price announcements rather than assume that every change in international prices will immediately produce a corresponding change at the pump. Kenya’s regulated pricing system incorporates a defined review process, and the final retail price reflects several components beyond the international purchase price.
Businesses also need to distinguish between a temporary cost spike and a sustained change in operating expenses. Transport companies may need to review fuel consumption, route planning and vehicle utilisation, while manufacturers and distributors may need to reassess delivery costs and pricing assumptions.
The challenge is to provide relief without creating unsustainable fiscal pressures or weakening incentives for efficient energy use. Clear communication about the relationship between international import costs, taxes and retail prices can also help the public understand why fuel prices change and what government interventions can realistically achieve.
The coming months will be especially important if global energy-market disruptions continue to push up the cost of refined petroleum products.
EPRA DG Edward Kinyua Highlights a Wider Economic Challenge
The warning by EPRA DG Edward Kinyua that September recorded the highest fuel import costs since the Middle East crisis began underscores the scale of the challenge facing Kenya’s economy.
The 11.81 per cent increase in the landed cost of super petrol and the 11.32 per cent rise in diesel costs demonstrate how quickly an external shock can place pressure on domestic fuel prices. The government’s reduction of VAT from 16 per cent to 8 per cent offers a measure of relief, but it cannot eliminate the underlying risks created by expensive international petroleum.
The broader concern is what happens after the fuel reaches the pump. Higher operating expenses can squeeze transport businesses, put pressure on household budgets and increase the cost of moving essential goods across the country.
Kenya’s response will require a combination of short-term consumer protection, transparent fuel-price regulation and longer-term efforts to reduce unnecessary dependence on imported petroleum. The immediate priority is to manage the cost shock, but the enduring economic lesson is that greater energy efficiency and diversification can help reduce the country’s exposure to future international crises.
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