The International Monetary Fund (IMF) expects global oil prices to ease in 2027 after a sharp surge triggered by the US-Israel war with Iran, offering a potential reprieve for fuel-importing economies such as Kenya.
The lender projects the average price of a barrel of oil will reach $95.74 (approximately KSh12,428) in 2026, before declining to $87.39 (about KSh11,344) in 2027, based on the exchange rates provided.
Although the projected decline would ease some pressure on global energy markets, oil prices would remain significantly higher than their levels before the conflict began on February 28, 2026.
The 2027 forecast is more than $17 (approximately KSh2,207) above the pre-war price of Brent crude, which traded at around $70 per barrel, although daily prices fluctuated between approximately $66 and $72.
Oil Prices Surge More Than 70 Per Cent
Global oil prices have risen by more than 70 per cent this year as the conflict involving the United States, Israel and Iran has unsettled energy markets and intensified concerns about supply disruptions.
The conflict has heightened uncertainty over the movement of crude oil and petroleum products through strategically important shipping routes, putting pressure on international prices.
However, oil markets recorded a decline on Tuesday, October 13, after US President Donald Trump announced that Russia had agreed to supply diesel to global markets.
Brent crude fell to approximately $105 per barrel amid hopes that additional supplies could ease pressure on fuel markets.
Trump also temporarily eased US sanctions on Russian fuel, a move that could help increase the availability of petroleum products and reduce some concerns over tight supplies.
Despite the decline, prices remained well above pre-war levels, reflecting continued uncertainty over the conflict and the outlook for global energy supplies.
Middle East Tensions Keep Markets on Edge
The outlook for oil prices remains uncertain as security concerns continue across the Middle East.
Reports that Iran-aligned Houthi forces struck Riyadh’s international airport over the weekend, alongside reports of attacks on tankers near the Strait of Hormuz, have added to concerns about the security of energy infrastructure and shipping routes.
The Strait of Hormuz is a critical passage for international oil shipments, meaning prolonged disruption could have significant consequences for global supply and prices.
Any sustained improvement in supply conditions could support the IMF’s projected decline in prices, while further escalation could keep oil markets volatile.
Kenya Awaits New Fuel Prices
The IMF’s forecast comes as Kenya prepares for the next fuel price announcement by the Energy and Petroleum Regulatory Authority (EPRA).
The regulator is expected to announce maximum retail pump prices for the pricing cycle running from October 15 to November 14.
In Nairobi, the current maximum retail prices stand at:
- Super Petrol: KSh214.03 per litre
- Diesel: KSh217.86 per litre
- Kerosene: KSh191.38 per litre
The next review will be closely watched by motorists, transport operators, businesses and households already facing high fuel costs.
International crude prices are an important factor in Kenya’s fuel pricing, but changes in global oil markets do not automatically translate into equivalent changes at local petrol stations. Import costs, exchange rates, taxes, levies and other pricing components also influence the final pump price.
What the Forecast Could Mean for Kenyan Consumers
If international oil prices decline as projected in 2027, Kenya could experience some relief in the cost of importing petroleum products, provided other factors remain favourable.
Lower fuel import costs could help moderate transport expenses and reduce some of the pressure on businesses that depend heavily on diesel and petrol.
However, the benefits would depend on how global prices evolve, the performance of the Kenyan shilling and the other components used to calculate domestic fuel prices.
For now, motorists will be watching EPRA’s next announcement for an indication of whether the recent movement in international markets will translate into changes at the pump.
The IMF’s projection points to the possibility of easing oil prices next year, but continued geopolitical tensions mean that a sustained return to pre-war levels remains uncertain.
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