Kenya has turned to the World Bank for urgent financial support as the country braces for fresh inflationary pressures driven by surging global oil prices amid escalating tensions in the Middle East.
Central Bank Governor Kamau Thugge, speaking on the sidelines of the IMF-World Bank Spring Meetings in Washington, told Reuters that Nairobi has requested “significant” rapid financing to stabilise the fuel market and shield consumers from further price shocks.
While declining to disclose the amount sought, Thugge said the facility would help secure fuel supplies and ease pressure at the pump. The appeal comes at a politically sensitive moment for President William Ruto’s administration, which is grappling with public anger over steep fuel price increases announced earlier this week by the Energy and Petroleum Regulatory Authority (EPRA).
The regulator raised the price of super petrol by close to Sh29 per litre and diesel by Sh40, triggering widespread backlash from households and businesses already strained by the high cost of living. In a swift response, President Ruto on Friday assented to a Tax Amendment law reducing VAT on petroleum products to eight per cent, down from the 13 per cent proposed earlier.
The move has led to a partial relief at the pump, with revised prices now averaging about Sh197.60 per litre for petrol, Sh196.63 for diesel, and Sh152.78 for kerosene in Nairobi, moderating but not fully reversing this week’s sharp increases. The government has also released Sh6.5 billion from the fuel levy fund to subsidise kerosene prices, cushioning the majority at the bottom of the economic pyramnid on rely on the fuel for lighting and cooking.
In the initial announcement on Tuesday, the regulator increased the price of a litre of petrol and diesel by Sh206, pushing prices to the highest level since early 2024. The ongoing double blockage of the Strait of Hormuz, a critical artery through which roughly a fifth of the world’s oil supply passes, has rattled global energy markets.
The disruption is linked to the intensifying conflict involving Iran and its regional adversaries, which has significantly constrained supply and driven up crude prices. For fuel-importing economies like Kenya, the impact has been immediate: higher landed costs, a weaker shilling against the dollar, and rising inflation risks. Kenya is not alone in seeking emergency buffers.
Several African economies, particularly net oil importers such as Ghana, Senegal, and Rwanda, have either approached multilateral lenders or are exploring contingency financing to cushion their economies against the shock. Others, including Egypt, have expanded subsidy programmes to tame domestic unrest linked to rising fuel costs. In Kenya, the latest adjustments mark one of the sharpest monthly increases in recent history.
Just last month, motorists were paying roughly Sh179 per litre of petrol in Nairobi, with diesel averaging around Sh160. The latest spike, even after tax relief, represents a jump of over 15–20 per cent in a matter of weeks, filtering quickly into transport, food and production costs. Analysts warn that the fuel-driven inflation shock could ripple across the economy if not contained.
On Thursday, experts at Ernst & Young (EY) noted that sustained high fuel prices risk eroding gains made through recent monetary easing, potentially forcing the Central Bank of Kenya to reconsider its policy stance if inflation accelerates beyond target.
Meanwhile, the Kenya National Chamber of Commerce and Industry (KNCCI) has cautioned that rising energy costs are already squeezing small and medium enterprises, with many firms facing higher logistics and production expenses that could lead to job cuts or price hikes for consumers. “Fuel is a universal input cost. When it rises this sharply, the entire economy feels it,” KNCCI officials said, urging the government to expand targeted subsidies or tax relief measures.
