Fuel Prices Dip Marginally in EPRA’s Latest Review: Second Consecutive Month of Relief for Kenyan Consumers

Fuel prices have seen a marginal decrease for the period of September 15 to October 14, 2025, according to a recent announcement by the Energy & Petroleum Regulatory Authority (EPRA). This marks the second consecutive month of fuel price reductions, providing modest relief to consumers who have endured significant economic pressures throughout 2025.

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Breaking Down the Latest Price Adjustments

The latest review shows encouraging trends across all major fuel categories:

• Super Petrol prices have dropped by KShs. 0.79 per litre
• Diesel decreased by KShs. 0.11 per litre
• Kerosene fell by KShs. 0.80 per litre

The move, which is expected to offer a slight reprieve to consumers, results from a decline in the landed costs of imported petroleum products. In August 2025, the average exchange rate against the U.S. dollar was KShs. 129.62 per USD, which helped mitigate the cost of imports and contributed to the downward pressure on retail prices.

Understanding the Price Dynamics

The EPRA attributed the price reduction to several key factors that demonstrate the complex interplay of global and local economic forces affecting Kenya’s fuel market:

Landing Cost Analysis

The average landed cost of Super Petrol decreased by 0.46%, from $623.71 per cubic metre in July to $620.84 in August 2025. Diesel costs experienced a more significant decline, falling by 3.38% from $635.58 to $614.08 per cubic metre, while Kerosene decreased by 2.93% from $628.02 to $609.59 per cubic metre over the same period.

These reductions in landing costs directly translate to lower pump prices, as Kenya imports all of its refined petroleum products and benchmarks local prices against international market trends. The pricing methodology follows EPRA’s official pump price formulae, which incorporates various cost components including transportation, storage, and regulatory margins.

Exchange Rate Stability

The relative stability of the Kenyan shilling against the U.S. dollar during August played a crucial role in keeping import costs manageable. This stability contrasted sharply with earlier periods in 2025 when currency volatility significantly impacted fuel prices.

Regional Price Variations

The new prices vary across different regions due to logistical and transportation costs, reflecting Kenya’s geographic and infrastructure realities:

Nairobi Pricing (Capital City)

In Nairobi, the commercial hub, fuel will retail at:

• Super Petrol: KShs. 184.52 per litre
• Diesel: KShs. 171.47 per litre
• Kerosene: KShs. 154.78 per litre

Coastal and Remote Area Pricing

In the port city of Mombasa, prices are slightly lower due to proximity to import facilities, while remote towns like Mandera have the highest prices due to additional transportation costs and logistical challenges in fuel distribution across Kenya’s vast territory.

Context: Recent Fuel Price Volatility

This marginal decrease comes as welcome news following a turbulent period earlier in 2025 when fuel prices hit record highs. In January 2025, Kenyans experienced one of the steepest fuel price increases in recent years, with Super Petrol surging by KSh 16.96 to KSh 211.64 per litre, while Diesel increased by KSh 21.32 to KSh 201.00 per litre.

Historical Price Trends

The current gasoline price in Kenya stands at approximately $1.42-$1.43 per liter, compared to a global average of $1.21 per liter. This pricing reflects Kenya’s position as a net importer of refined petroleum products and the various taxes and levies that comprise the final pump price.

The average gasoline price from September 2015 to September 2025 was KES 134.00 per liter, with a minimum of KES 82.75 in April 2016 and a maximum of KES 219.07 in October 2023, highlighting the significant volatility that has characterized Kenya’s fuel market.

Economic Impact and Consumer Relief

Transportation Sector Response

The marginal price reduction is expected to provide some relief to Kenya’s transportation sector, which has been under significant pressure. Kenya’s inflation rate increased to 4.5% in August 2025 from 4.1% in July, with transport costs surging 4.4% year-on-year according to the Kenya National Bureau of Statistics (KNBS).

Despite the recent fuel price decreases, passenger transport costs have continued to rise, with matatu fares for routes like Mombasa to Nairobi increasing from KSh 1,300 to KSh 1,500, reflecting the delayed transmission of fuel cost benefits to end consumers.

Household Budget Impact

For ordinary Kenyan households, these price reductions offer modest relief but come against a backdrop of broader economic challenges. Kenya’s cost of living increased in July 2025 due to rising prices of essential commodities including sugar, flour (unga), and fuel, contributing to an overall inflation rate of 4.1%.

The reduction in kerosene prices is particularly significant for low-income households that rely on this fuel for cooking and lighting, offering some respite from energy costs that consume a substantial portion of their monthly budgets.

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Global Oil Market Dynamics

The price adjustments occur against a complex global backdrop. According to the Central Bank of Kenya’s weekly bulletin, global oil prices had edged higher in early September, with a 2.5% increase in the price per barrel of Murban crude, primarily driven by potential supply disruptions stemming from geopolitical tensions in the Middle East.

Current global oil market dynamics show that world oil supply increased to a record 106.9 mb/d in August as OPEC+ continues unwinding output cuts, while global oil demand is forecast to increase by only 740 kb/d in 2025, according to the International Energy Agency (IEA).

Geopolitical Influences

The CBK noted that “International oil prices rose, reflecting potential supply disruptions from the conflict in the Middle East and the war in Ukraine, even as concerns over weakening US demand and an expected oversupply from planned output increases by OPEC+ countries remain.”

This dynamic illustrates the challenging environment in which Kenya’s fuel pricing operates, where local consumers are exposed to global geopolitical risks despite the country’s geographic distance from conflict zones. Current oil prices at $63.11 per barrel remain volatile due to these geopolitical tensions.

Government-to-Government Fuel Deal Context

Kenya’s fuel pricing mechanism operates within the framework of a controversial Government-to-Government (G2G) deal with Gulf oil companies. Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), and Emirates National Oil Company have been supplying Kenya with refined petroleum products since April 2023.

Deal Structure and Challenges

The G2G arrangement, initially introduced to ease pressure on foreign exchange markets, provides Kenya with a 180-day credit window for payments. However, the deal has faced criticism for creating distortions in the foreign exchange market.

Energy Cabinet Secretary Opiyo Wandayi previously cautioned that while the G2G deal cushions Kenya against supply shortages, escalating geopolitical tensions could still affect local prices through increases in Free on Board costs that impact global markets.

Fixed Premium Concerns

One significant challenge with the current G2G arrangement is the fixed premium structure, which prevents Kenyan consumers from benefiting fully when global refined fuel prices decline. This has meant that some international price reductions don’t translate proportionally to local pump price relief.

Regulatory Framework and Pricing Methodology

EPRA’s monthly price reviews operate under Section 101(y) of the Petroleum Act 2019 and Legal Notice No. 192 of 2022, which provides the regulatory framework for determining maximum retail prices of petroleum products.

Price Components

The retail fuel prices include several components:

• Base landed cost of imported petroleum products
• 16% Value Added Tax (VAT) as provided under the Finance Act 2023
• Inflation-adjusted excise duties per Legal Notice No. 194 of 2020
• Transportation and distribution margins that vary by location
• Retail margins for fuel station operators

Monthly Review Process

EPRA conducts these reviews monthly, analyzing global crude oil prices, exchange rates, landed costs, and various tax components to determine maximum allowable pump prices. This system aims to ensure that price adjustments reflect market realities while protecting consumers from excessive pricing. The complete methodology is detailed in EPRA’s pump price formulae documentation.

Economic Implications and Future Outlook

Inflation Dynamics

Fuel prices play a significant role in Kenya’s inflation calculations, as the country relies heavily on diesel for transportation, power generation, and agriculture, while kerosene remains important for many households’ cooking and lighting needs.

The marginal price reduction may help moderate inflationary pressures, though food and non-alcoholic beverages continue to drive inflation higher, rising 8.3% year-on-year in August 2025. The Central Bank of Kenya tracks inflation rates as part of its monetary policy framework.

Supply Chain Effects

Lower diesel prices particularly benefit Kenya’s logistics and transportation sectors, potentially reducing the cost of moving goods across the country. This could have positive downstream effects on the prices of essential commodities, though the impact may take time to materialize fully.

Business and Industrial Impact

For businesses, especially those in manufacturing and logistics, even marginal fuel cost reductions can translate to meaningful savings when scaled across large operations. This could help improve business competitiveness and potentially support job creation in fuel-intensive sectors.

Looking Ahead: Challenges and Opportunities

Exchange Rate Vulnerability

Kenya’s continued reliance on imported petroleum products means that fuel prices remain vulnerable to exchange rate fluctuations. Any significant weakening of the shilling against the dollar could quickly erode the current price gains.

Global Market Risks

Ongoing geopolitical tensions in the Middle East and Eastern Europe continue to pose risks to global oil supply chains. Kenya’s energy security remains tied to these global dynamics, making price stability challenging to achieve. OPEC+ production decisions and global oil market forecasts from the IEA suggest continued volatility ahead.

Energy Transition Considerations

The government’s broader energy strategy includes increasing renewable energy adoption and potentially exploring local refining capabilities to reduce import dependence. However, these longer-term solutions require substantial investment and time to implement.

Consumer Advice and Market Outlook

Budget Planning

While the current price reductions provide relief, consumers and businesses are advised to continue prudent fuel budget planning, given the inherent volatility in global oil markets and exchange rate fluctuations.

Alternative Energy Options

The price volatility in fossil fuels continues to highlight the importance of alternative energy sources for both individual households and businesses. Investment in solar, biogas, and other renewable technologies may provide long-term cost stability.

Conclusion

EPRA’s latest fuel price review offers modest but welcome relief to Kenyan consumers, marking the second consecutive month of price reductions. While the decreases are marginal, they signal positive trends in landing costs and exchange rate stability that could benefit the broader economy.

However, the complex interplay of global oil markets, geopolitical tensions, and local economic dynamics means that fuel price stability remains elusive. The ongoing G2G arrangement with Gulf suppliers provides supply security but with fixed premium structures that limit the full transmission of global price benefits to consumers.

As Kenya continues to navigate these challenging energy market dynamics, the latest price review provides a brief respite while highlighting the need for longer-term energy security strategies that reduce dependence on volatile global markets. For now, consumers can enjoy marginally lower fuel costs, though vigilance regarding future price movements remains essential given the numerous factors that influence Kenya’s energy costs.

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By: Montel Kamau

Serrari Financial Analyst

15th September, 2025