Global oil prices fell by 3 percent on Wednesday, November 8, recording the lowest price since prices spiked in the wake of the conflict between Israel and Hamas in October.
Internationale Nederlanden Groep (ING) analysts Warren Patterson and Ewa Manthey stated that the drop could be attributed to the market being less concerned about crude oil supply disruptions from Middle Eastern countries.
Notably, Brent crude oil by Tuesday was trading at Ksh12,263 ($81) a barrel while the US crude also prices also reduced to Ksh11,657 ($77), registering declines above Ksh454 ($3) for each.
“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” he stated.
US Report Backs the Decrease in Oil Prices
Subsequently, a new forecast from the United States (US) Energy Information Administration – EIA, indicated that its crude production would rise in 2023 slightly less than previously expected.
Also, petroleum consumption will fall by 300,000 barrels per day (bpd), reversing the administration’s previous forecast of a 100,000-bpd increase.
Further, analysts noted a concern in the downside pressure on oil that came from a decline in China’s economy because of a decrease in demand for its exports and domestic troubles.
Updated forecasts for refinery activity in China suggested lower volumes were expected throughout November and December, placing further downwards pressure on prices.
Also Read: Kenyans Furious as Tanzania Reduces Fuel Prices
“The meltdown we’ve seen in prices is reflecting two things: concerns about the global economy hitting a brick wall based on data out of China and also a sense of confidence that the war in Israel and the Gaza Strip is not going to impact supply,” an analyst at Price Futures Group Phil Flynn stated.
Increase in Fuel Prices in Kenya
The reports came amidst a looming hike in fuel prices to a record high of Ksh300 per litre in Kenya after a revelation by Energy Cabinet Secretary Davis Chirchir to a National Dialogue Committee.
CS Chirchir told the committee on Monday, November 6, that the changes would take effect in the following review done by the Energy and Petroleum Authority (EPRA).
Also Read: CS Chirchir Hints at Looming Record High Petrol Prices
Chirchir blamed the ongoing conflict between Israel and Palestine for the increase adding that there is nothing much that the government could do to cushion Kenyans.
“We hope it doesn’t get there. These are products that are real drivers of inflation and so we are working on it on a day-to-day basis to make sure that though it is a global challenge, we obtain the best pricing for our country,” he stated.
Meanwhile, in the neighboring country Tanzania, the government slashed the retail fuel prices due to a drop in world oil prices by 5.68 percent.
“Changes in prices of petroleum products in November 2023 are mainly due to the decrease in the world oil price by an average of 5.68%,
“And a decrease in premiums for the importation of petroleum products by an average of 13% for PMS and 25% for AGO, reduction of production of petroleum products by OPEC+ and economic sanctions on Russia,” a statement from the Tanzanian government read in part.
