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Diesel prices drop by biggest margin in four years

Diesel prices drop by biggest margin in four years

Diesel prices have dropped by the highest margin in four years in the latest monthly pricing review, as consumers gain from a sharp drop in global prices of refined fuel and a strengthening shilling.

The Energy and Petroleum Regulatory Authority (Epra) cut diesel prices by Sh6.08 to Sh173.10 per litre in Nairobi and by Sh3 for a litre of super petrol to Sh189.84. A litre of kerosene fell by Sh5.71 to sell for Sh163.05 effective Friday midnight.

The prices of diesel in the global market fell by 7.7 percent to $680.20 per barrel as per the global S&P Global Platts pricing while those of petrol dropped by 8.35 percent to $849.52 per barrel.

The shilling also strengthened to exchange at 132.72 units to the dollar last month, compared to 134.63 in April, thus lowering the cost of shipping in the fuel cargoes.

The last time diesel prices fell by a higher margin was in May 2020 when they dropped by Sh19.19 to Sh78.37.

“In the period under review, the maximum allowed pump price for super petrol, diesel and kerosene decrease by Sh3 per litre, Sh6.08 per litre and Sh5.71 per litre respectively,” Epra Director-General Daniel Kiptoo said in the pricing notice on Friday morning.

S&P Global Platts is a global provider of benchmark prices of key commodities including energy.

The price cuts are expected to significantly ease inflation given the integral part of fuel prices especially diesel, in determining the cost of services and goods in the country.

Kenya’s economy is diesel-driven and energy costs of energy and transport have a significant weighting in the basket of goods and services used to measure inflation in the country.

Producers of services such as electricity and manufactured goods are also expected to factor in the fall in petroleum prices.

Inflation — the measure of the cost of living— marginally rose to 5.1 percent last month from five in April, driven by high costs of food and electricity.

Diesel prices have been dropping since October last year, albeit at times near insignificant drops of Sh1 a litre, mirroring the global trends in the cost of the commodity.

Prices of Murban crude stood at $84.52 per barrel last month, compared to $87.28 in October last year. The continued drops have helped the State to preserve the billions of shillings collected every month to stabilise pump prices.

The American investment bank, JP Morgan projects that prices of Brent crude will hold steady for the remainder of the year at $84 per barrel.

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