President William Ruto convened a high-level inter-ministerial briefing on March 30, 2026 and directed coordinated government action to protect Kenya’s economy from the deepening fallout of the U.S.-Israeli war with Iran. The conflict, which began on February 28, 2026, has disrupted roughly 20% of global oil and gas supply by affecting the Strait of Hormuz — the world’s most critical energy shipping chokepoint — and has sent crude oil prices surging past $110 a barrel. Kenya, which sources all of its fuel from the Middle East, faces real vulnerability. Yet officials say a government-to-government (G-to-G) fuel procurement arrangement with Gulf state oil companies has so far cushioned Kenyans from immediate price shocks. Beyond fuel, the government says fertiliser stocks are sufficient through September, tea exports have outperformed year-on-year despite global headwinds, and the Port of Lamu is recording a surge in transshipment cargo. Meat exports, however, face disruption, and the broader pressure on global supply chains means the situation continues to evolve.
Key Overview
- Iran war began February 28, 2026, disrupting the Strait of Hormuz and global oil markets
- The Strait of Hormuz carries approximately 20% of global oil and gas supply
- Global crude has surged to approximately $110 a barrel, up more than 50% in four weeks
- Kenya sources all its fuel from the Middle East, primarily from Gulf state suppliers
- Kenya’s G-to-G deal with ADNOC, Saudi Aramco, and ENOC provides fuel on 180-day credit terms
- EPRA kept pump prices unchanged as of March 14, but a price rise is expected in the next cycle
- About 20% of independent fuel retailers reported supply shortfalls as of late March
- Fertiliser stocks are secured for the current rainy season through September 2026
- Tea exports hit 81% of auction volumes in March 2026, up from 75% in March 2025
- Port of Lamu handled over 4,000 high-value motor vehicles for transshipment to Gulf markets
- Meat exports are disrupted due to logistical and freight challenges
- Kenya plans to engage international logistics firms to capture emerging transshipment opportunities
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A War Felt at the Pump in Nairobi
When the United States and Israel launched military strikes on Iran on February 28, 2026, the reverberations were almost immediately felt across global commodity markets. Within days, Iran’s move to disrupt tanker traffic through the Strait of Hormuz — a narrow waterway linking the Persian Gulf to global markets that carries roughly one-fifth of the world’s oil and liquefied natural gas — had sent crude prices surging. By mid-March, Brent crude had hit $100 a barrel, a 13% increase from pre-war levels, with analysts warning it could reach $120 if the situation did not move toward resolution. By late March, global oil was lodged around $110 a barrel.
For Kenya — which imports all of its petroleum products, primarily from the Middle East — the arithmetic of this disruption is direct and uncomfortable. Murban crude, the grade Kenya typically imports, climbed to $116.80 per barrel by mid-March, up sharply from $76.25 per barrel just weeks earlier. Iranian drones struck the UAE’s major bunkering hub in mid-March 2026, directly affecting Kenya’s primary supply corridor. Analysts warned that new fuel shipments arriving in Kenya would come at significantly elevated prices, with the full impact set to land in the next monthly pump price review cycle managed by the Energy and Petroleum Regulatory Authority (EPRA).
President William Ruto’s response was to convene a high-level briefing on March 30 drawing together officials from the Ministries of Energy, Agriculture, Trade, the National Treasury, the Central Bank of Kenya, and private sector representatives, before issuing a coordinated government statement. “The ongoing conflict in the Middle East is having a significant impact on the global economy,” Ruto said. “Africa, including Kenya, is not immune to these effects.”
The G-to-G Arrangement: Kenya’s Fuel Shock Absorber
The centrepiece of Kenya’s defence against the oil price surge is its government-to-government (G-to-G) fuel procurement arrangement — a mechanism that has been in place since March 2023 and has been repeatedly extended given its effectiveness.
Under the arrangement, Kenya entered into Master Framework Agreements with Saudi Aramco, the Abu Dhabi National Oil Company (ADNOC), and Emirates National Oil Company (ENOC) on March 10, 2023. The structure allows Kenya to source petroleum products — diesel, petrol, kerosene, and jet fuel — directly from Gulf state-owned oil producers on 180-day deferred payment terms. This means Kenya does not need to find hundreds of millions of U.S. dollars per month to pay for fuel at the moment of delivery — a crucial benefit in an environment where shilling pressure and dollar liquidity constraints have been a recurring challenge.
ADNOC supplies diesel and jet fuel, Saudi Aramco supplies diesel through nominated local marketers, and ENOC supplies petrol. The arrangement replaced the Open Tender System and was originally structured to reduce monthly U.S. dollar demand by an estimated $500 million. The deal has been extended multiple times since its inception, reflecting both its fiscal utility and its political value as a shield against fuel price volatility.
Ruto leaned heavily on this arrangement in his March 30 statement. “Rising international oil prices are already affecting consumers globally. However, the government-to-government fuel procurement arrangement has cushioned Kenyans from immediate shocks,” he said. Government officials, including Moses Kuria, have also pointed out that sourcing directly from national oil companies like ADNOC and Saudi Aramco — as opposed to trading intermediaries — reduces the risk of artificial price manipulation and supply shocks that neighbouring countries relying on private traders have experienced.
Cracks in Supply: Retailers Sound the Alarm
Despite the government’s reassurances, the situation on the ground has been more pressured than official statements suggest. Even before Ruto’s March 30 briefing, signs of strain had already surfaced at the retail level.
Martin Chomba, Chairman of the Petroleum Outlets Association of Kenya (POAK), which represents independent retailers, transporters, and others serving 68% of the national market, told Reuters that around 20% of fuel outlets were experiencing supply shortfalls by late March. Chomba attributed the squeeze to EPRA’s decision to hold pump prices unchanged on March 14 — despite the spike in international crude — which had made it commercially unviable for some importers to bring in new cargoes at prevailing costs without absorbing losses.
EPRA’s decision to freeze pump prices for the March 14 to April 14 cycle was facilitated by the timing of Kenya’s G-to-G shipments — the country had received and released fuel vessels between February 10 and March 9, before the Iran war began on February 28, meaning the full impact of higher international prices had not yet fed through into the cargoes being priced. But Chomba warned of a “real shock” on the way, noting that dealers were likely to begin hoarding in anticipation of the inevitable price adjustment in the April cycle.
Geopolitical economist Aly-Khan Satchu was direct about Kenya’s dual exposure: “The first challenge is going to be actually receiving the requisite fuel. The second challenge is the price of that fuel.” The UAE’s bunkering hub at Fujairah was struck by Iranian drones in mid-March, directly disrupting the supply infrastructure Kenya depends on — and raising the real possibility of delayed or reduced shipments in the coming weeks regardless of payment arrangements.
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Kenya in a Global South Facing Shared Pain
Kenya’s vulnerability is real, but it is far from unique. Across the Global South, countries heavily dependent on imported energy are bearing the brunt of the Strait of Hormuz disruption. Bangladesh, which imports around 95% of its oil, has seen petrol pumps run dry in some districts. Pakistan, which sources about 80% of its energy from the Gulf, has scrambled to conserve fuel ahead of its wheat harvest. Egypt has ordered shops and malls to close early to conserve power. Sri Lanka, still recovering from its 2019 economic meltdown, has introduced fuel passes and declared public holidays to manage its dwindling stockpiles.
Kenya’s comparative resilience — at least in the first weeks of the crisis — is in large part attributable to the G-to-G structure, which provides a more stable supply channel than ad hoc spot purchasing. But analysts are clear that this buffer is not unlimited. A sustained high oil price environment would cascade through Kenya’s transport, manufacturing, and agriculture sectors, translating into broader inflationary pressure and eroding household purchasing power. Higher fuel costs also put pressure on the shilling. Renewable energy expert Juliana Kainga noted that reduced export earnings from tea, coffee, and cut flowers — coupled with the need to spend more dollars on oil — would squeeze Kenya’s external accounts and intensify currency pressure.
Fertiliser, Tea, and the Port of Lamu: Areas of Resilience
Not everything in Ruto’s March 30 assessment was defensive. On several fronts, Kenya’s economic position is holding up better than feared.
On fertiliser — a critical input for Kenyan smallholder farmers — the president said the government has secured adequate supplies to support the ongoing rainy season through September 2026. This is particularly significant given that global fertiliser prices surged by up to 40% in the weeks following the start of the Iran conflict, as disruptions in fuel and chemical feedstock markets rippled through agricultural supply chains globally.
On trade, Kenya’s tea export performance has been a bright spot. Despite initial fears that the geopolitical disruption could close key markets, government data shows that 81% of tea offered at the Mombasa auction in March 2026 was sold — up sharply from 75% in March 2025. The improvement reflects Kenya’s ongoing diversification into new tea markets, reducing dependence on any single buyer or region. The Mombasa Tea Auction is the world’s largest black tea auction, handling tea from Kenya, Uganda, Tanzania, Rwanda, Burundi, and the Democratic Republic of Congo, and the March uptick signals that demand from Kenya’s diverse buyer base remains robust even amid geopolitical uncertainty.
The Port of Lamu has emerged as an unexpected beneficiary of the Gulf disruption. The port, which has been steadily expanding its capacity and strategic role as part of Kenya’s LAPSSET infrastructure corridor, has recorded a sharp increase in throughput — including the handling of more than 4,000 high-value motor vehicles destined for Gulf markets for onward transshipment. As shipping routes and logistics flows are rerouted away from conflict-affected zones, Kenya’s position as a stable, well-located port hub in East Africa is attracting increased cargo that might otherwise have moved through more northern routes. Ruto said the government plans to engage international logistics companies to capitalise on these emerging transshipment opportunities and strengthen Kenya’s position in regional and global supply chains.
Where the Pressure Is Biting: Meat Exports and the Cost of Living
Not all sectors are weathering the storm equally. Meat exports — a growing area of Kenya’s agricultural trade with Gulf markets — have been directly hit by logistical and freight disruptions stemming from the conflict. The Ministries of Trade and Agriculture are working to identify alternative solutions and explore rerouting options to keep export channels open for producers.
On the consumer side, the most immediate risk for ordinary Kenyans remains what happens at the pump in April’s fuel price review cycle. EPRA’s decision to hold prices in March bought time, but the next pricing cycle will need to reflect the significantly higher cost of new cargoes arriving at Mombasa from a Gulf region where supply infrastructure has been damaged and prices have surged. In Nairobi, motorists are currently paying KSh 178.28 per litre of petrol and KSh 166.54 for diesel — prices that are widely expected to rise in April.
Higher fuel costs would not stay contained at the pump. In Kenya, fuel is a key driver of inflation and economic activity, feeding into transport costs, manufacturing overheads, agricultural input costs, and ultimately the price of goods on supermarket shelves. Public transport fares — largely determined by diesel costs — would rise quickly. The 2027 election cycle, now gradually coming into view, adds political pressure to the government’s resolve to shield consumers from the sharpest price increases, even at some fiscal cost.
Analysts note, however, that the e-mobility sector has grown rapidly in Kenya, with electric vehicle adoption increasing more than 3,000% between 2024 and 2026 — a structural shift that is beginning to reduce the country’s exposure to fuel price shocks, at least at the margins. Renewable energy advocates have long argued that dependence on imported fossil fuels is not merely a climate issue but an economic vulnerability — and the current crisis is making that argument with unusual force.
What Comes Next
The immediate horizon for Kenya depends heavily on how long the Iran war disruption persists. Ruto’s statement committed the government to ongoing monitoring and decisive action, with the National Treasury and Ministry of Energy tasked with assessing international fuel prices continuously and implementing mitigating measures where necessary. The Central Bank of Kenya is also involved, reflecting the currency and reserve implications of a sustained import price shock.
If the Strait of Hormuz remains disrupted and crude stays above $110 a barrel, Kenya — like most of sub-Saharan Africa — will face compounding pressure: higher pump prices, elevated food costs, currency depreciation risks, and reduced purchasing power for households that are already managing tight budgets. The G-to-G arrangement provides a structural buffer, but it does not eliminate the fundamental vulnerability of an economy that imports every barrel of oil it consumes.
What Kenya’s response does illustrate is the value of advance structural positioning — both the G-to-G supply architecture built in 2023 and the fertiliser stockpiling ahead of the planting season — in providing breathing room when external shocks arrive. Whether that buffer holds through the coming months will depend as much on geopolitics in the Gulf as on decisions made in Nairobi.
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