Oil prices to shoot as Opec mulls cuts
By Seth Onyango, March 6, 2020
Seth Onyango @SethManex
Local motorists are staring at possible surge in pump prices as oil ministers meet in Vienna to prop up oil prices after its value plunged 20 per cent in the wake of the coronavirus outbreak.
Leaders from Organisation of the Petroleum Exporting Countries (Opec) nations and Russia are looking to cut output in a bid to forestall further price slide that could have far-reaching economic implications on the global economy.
But according to the New York Times, Russia is playing hardball by resisting any push to cut production.
IHS Markit, a research firm, estimated that demand for oil would fall by 3.8 million barrels a day, or about four per cent of world supplies, over the first three months of this year — the largest quarterly drop in demand the researchers had ever seen, exceeding declines during the 2008 financial crisis.
In Kenya, production cuts could see motorists pay more at pump stations, hurting businesses that are caving under the weight of the coronavirus.
Import costs
In its monthly review Energy and Petroleum Regulatory Authority (Epra) announced price hikes attributing it to high import costs.
In Nairobi, super petrol increased by Sh2.67 per litre to Sh112.87, Diesel increased by Sh2.13 per litre to Sh104.45, with kerosene decreasing by Sh1.26 per litre to Sh102.69.
The changes in this month’s prices were informed by increase in average landed cost of imported Super Petrol by 3.91 per cent from $471.01 (Sh48,372.73) in December 2019 to $489.44 (Sh50,265.49) per cubic metre in January.
Diesel price increased 2.68 per cent from $493.68 (Sh50,700.94) in December to $506.92 (Sh52,060.68) in January.
However, the average landed cost for Kerosene decreased by 2.64 per cent to $495.32 (Sh50,869.36) per cubic metre in January from $508.77 (Sh52,250.68) recorded in December.
Facing this grim outlook, the delegates would seem to have little choice but to pile further cuts on top of the already previously agreed curbs of 2.1 million barrels a day, or about two percent of global oil supplies.