Kenyan motorists and households will experience modest relief at the pump following the Energy and Petroleum Regulatory Authority’s latest price reduction announced Wednesday, January 14, 2026. The energy regulator slashed petrol prices by Sh2 per litre while diesel and kerosene each dropped by Sh1 per litre, marking the first downward adjustment after months of stable pricing that left consumers grappling with elevated fuel costs despite declining international oil markets.
In Nairobi, petrol now retails at Sh182.52 per litre, diesel at Sh170.47, and kerosene at Sh153.78 following the latest review cycle that takes effect from Thursday, January 15, 2026, and will remain in force until February 14, 2026. The new prices represent a departure from the December-January pricing cycle during which EPRA maintained unchanged pump prices despite complex and mixed movements in the underlying international costs of fuel imports.
“During the period under review, the maximum allowed petroleum pump prices for super petrol, diesel and kerosene decrease by Sh2 per litre, Sh1 per litre and Sh1 per litre respectively,” EPRA Director General Daniel Kiptoo said in a statement released on Wednesday. The announcement provides some breathing room for transport operators and households who have faced mounting pressure from elevated fuel costs that ripple through the economy, affecting everything from food prices to manufacturing costs.
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Global Oil Price Decline Drives Local Reductions
The regulator attributed the reduction to declining global prices, specifically pointing to a broad-based decline in the average landed cost of fuel imports during December 2025. EPRA data shows the average landed cost of imported super petrol dipped slightly by 0.10 percent from $592.84 per cubic metre in November 2025 to $592.24 per cubic metre in December 2025, translating to a marginal decrease in the base cost before local taxes and margins are applied.
Diesel recorded a sharper decline of 4.20 percent, dropping from $654.24 per cubic metre to $626.75 per cubic metre over the same period. This more substantial reduction in diesel’s landed cost reflects broader market dynamics in the global refined products market, where diesel prices have experienced greater volatility compared to gasoline amid shifting demand patterns and refining economics.
Kerosene, which is primarily used for cooking and lighting in rural and peri-urban households, recorded the highest decline of 8.92 percent, with its landed cost plunging from $667.05 (Ksh86,016.10) per cubic metre to $607.55 (Ksh78,343.57) per cubic metre. This dramatic reduction in kerosene’s import cost offers particular relief to lower-income households that rely on the fuel for essential cooking needs, though the translation to pump price savings of just Sh1 per litre has drawn criticism from consumer advocates.
International fuel prices trended lower in December 2025, with super petrol averaging $651.87 per metric tonne, diesel $583.55, and kerosene $645.36, down from November levels. These declining international refined product prices reflect broader weakness in global oil markets driven by a combination of increased production, subdued demand growth, and easing geopolitical tensions that had previously supported price premiums.
Crude Oil Market Trends Mirror Refined Product Weakness
Crude oil markets mirrored the downward trend in refined products, with Murban crude—the benchmark for Kenya’s fuel imports—falling to an average of $65.79 per barrel in December from $70.22 in November. This decline of approximately 6.3 percent in the crude oil benchmark that underpins Kenya’s petroleum import costs represents a significant easing in the raw material costs that ultimately determine pump prices.
The Central Bank of Kenya’s weekly bulletin, which summarizes monetary and financial developments both domestically and globally, reported that international oil costs declined in January 2026. The CBK’s report indicated that the price of Murban crude oil dropped by Ksh194.79 from $62.51 (Ksh8,063.79) per barrel on Wednesday, December 31, 2025, to $61 (Ksh7,869) per barrel on Thursday, January 8, 2026, suggesting continued weakness in global crude oil markets that could support further pump price reductions in future review cycles if the trend persists.
CBK Governor Kamau Thugge noted on December 10, 2025, that international oil prices have moderated due to increased production and subdued global demand, reflecting fundamental supply-demand dynamics that have shifted oil markets from the tight conditions that prevailed through much of 2024 and early 2025. The combination of expanded production from major oil-producing nations and slower-than-expected global economic growth has created a more balanced market environment that favors consumers over producers.
Exchange Rate Stability Cushions Local Prices
The shilling remained relatively stable against the US dollar at about Sh129 during the review period, helping cushion local pump prices from currency-driven increases that have historically exacerbated fuel cost volatility in Kenya. Kenya imports all its petroleum products in refined form, making local pump prices highly sensitive to movements in international markets, shipping costs, and—critically—the exchange rate between the Kenyan shilling and the US dollar in which global oil trades are denominated.
EPRA explained that Kenya sets local prices based on international market rates while factoring in the United States dollar to Kenya shilling exchange rate when calculating maximum retail prices. The USD-KShs rate rose slightly from 129.54 in October 2025 to 129.81 in November 2025 before stabilizing around the 129 level in December, preventing what could have been larger pump price reductions if the shilling had strengthened more substantially during the period.
Currency stability has emerged as a critical factor in Kenya’s fuel pricing dynamics, as sharp depreciations of the shilling can quickly overwhelm any benefits from declining international oil prices, while periods of currency strength can amplify the consumer gains from falling global crude and refined product costs. The relative stability of the shilling over recent months has provided a favorable backdrop for translating international price declines into domestic pump price relief, though the magnitude of the reductions has disappointed many Kenyan consumers who expected more substantial cuts.
Regional Price Variations Reflect Distribution Costs
Fuel prices vary across Kenya’s major towns and cities, reflecting differences in distribution costs, local taxes, and the distance from import terminals at the port of Mombasa. Mombasa residents, benefiting from proximity to import facilities, will pay Sh179.24 for petrol, Sh167.19 for diesel, and Sh150.49 for kerosene per litre under the new pricing structure, representing the lowest fuel costs in the country due to minimal inland transportation expenses.
In Eldoret, a major commercial center in the Rift Valley region, the prices stand at Sh182.38 for petrol, Sh170.68 for diesel, and Sh154.03 for kerosene respectively. These prices closely mirror those in Kisumu, Kenya’s third-largest city located on the shores of Lake Victoria, where motorists will pay Sh182.37 for petrol, Sh170.68 for diesel, and Sh154.03 for kerosene per litre, reflecting similar inland transportation costs from Mombasa to western Kenya.
Nakuru, strategically positioned along the Mombasa-Kampala highway in the Rift Valley, will see petrol retail at Sh181.56, diesel at Sh169.87, and kerosene at Sh153.21 per litre. The town’s location on major transportation routes provides some logistical advantages that translate to slightly lower prices compared to more remote locations, though the differences remain modest given EPRA’s regulatory framework that seeks to balance regional price variations.
Mandera, located in Kenya’s far northeastern region near the borders with Somalia and Ethiopia, represents the most expensive market in the country with petrol at Sh204.70, diesel at Sh192.65, and kerosene at Sh175.96 per litre. The substantially higher prices in Mandera—approximately 12 percent above Nairobi levels for petrol—reflect the significant additional costs of transporting fuel over long distances through challenging terrain and security-sensitive areas, as well as the higher risks and insurance premiums associated with operating in Kenya’s frontier regions.
Regulatory Framework and Pricing Methodology
EPRA announced the maximum retail fuel prices in accordance with Section 101(y) of the Petroleum Act 2019 and Legal Notice No.192 of 2022, which establish the legal framework for petroleum price regulation in Kenya. The regulatory authority conducts monthly price reviews to ensure that fuel prices at the pump reflect the true cost of petroleum products already in the country, while also considering global price trends, taxes, and local distribution costs.
The prices are inclusive of the 16 percent Value Added Tax (VAT) in line with the provisions of the Finance Act 2023, the Tax Laws (Amendment) Act 2024, and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020. This comprehensive tax burden—which includes VAT, excise duties, road maintenance levy, petroleum development levy, and other statutory charges—represents a substantial component of the final pump price that Kenyan consumers pay, often accounting for more than half of the retail price.
Director General Kiptoo noted the authority remains committed to observing fair competition and protecting consumer and investor interests through its regulatory oversight. “The purpose of the petroleum pricing regulations is to cap the retail prices of petroleum products which are already in the country so that importation and other prudently incurred costs are recovered while ensuring reasonable prices to consumers,” he explained, highlighting the delicate balancing act EPRA must perform between ensuring viable returns for petroleum sector investors and protecting consumers from excessive pricing.
The monthly review framework provides consistency and transparency for planning by businesses and households, with prices published around the 15th of every month to allow for orderly adjustments rather than abrupt volatility. EPRA’s pricing methodology considers several core components including the landed cost (the price Kenya pays for refined products imported from international markets), distribution and marketing margins (costs associated with moving fuel from ports to retail stations), and the comprehensive array of taxes and levies imposed by the government.
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Consumer Reactions and Relief Expectations
Kenyans on social media expressed frustration with EPRA following the announcement, arguing that the price decrease did not offer meaningful relief at the pump despite substantial declines in global crude oil costs. Many consumers questioned why pump price reductions remained modest at Sh1-2 per litre when international oil prices have fallen more dramatically, pointing to a pattern where price increases appear to be implemented more swiftly and substantially than decreases when global markets move in consumers’ favor.
“The state fuels EPRA officials’ vehicles. They are just puppets. All the time, the rhythm is lower by KSh 1 to KSh 2 to manage the citizens, while prices are going down drastically globally. However, when there’s a hike, raise them by KSh 10 or more. What a waste of public resources,” complained one social media user identified as Sammy Sammy, capturing widespread sentiment among Kenyans who perceive asymmetry in how quickly fuel price changes are transmitted to consumers depending on whether international markets are rising or falling.
Another frustrated consumer stated: “We want the prices where retired president Uhuru Kenyatta left them. Anything short of that is a waste of time,” referencing the fuel price levels that prevailed under the previous administration and expressing nostalgia for what many Kenyans remember as a period of more affordable energy costs. This sentiment reflects broader economic anxieties among Kenyan households grappling with elevated living costs across multiple dimensions, from food to transportation to utilities.
Transport sector stakeholders offered mixed reactions to the price reductions. While acknowledging that any decrease provides some relief to operators who have faced squeezed margins amid elevated fuel costs, many argued that the modest adjustments would do little to fundamentally improve the economics of public transport, logistics, and delivery services that have been struggling with cost pressures. The cumulative impact of years of fuel price volatility has left many transport businesses operating on thin margins with little capacity to absorb further shocks.
For households and individual motorists, the reductions translate to modest savings that may not fundamentally alter consumption patterns or provide substantial relief from broader cost-of-living pressures. A typical motorist filling a 50-liter fuel tank will save Sh100 on petrol or Sh50 on diesel compared to the previous pricing cycle—meaningful amounts for budget-conscious consumers but hardly transformative given the accumulated burden of elevated fuel costs over extended periods.
Economic Implications and Ripple Effects
The price adjustments carry implications that extend far beyond individual motorists to encompass virtually every sector of Kenya’s economy. Fuel costs represent a critical input cost for agriculture, manufacturing, transportation, electricity generation, and services, meaning that changes in pump prices ripple through supply chains and ultimately affect consumer prices for a wide range of goods and services.
For the agricultural sector, diesel price changes directly impact the costs of tractor operations, irrigation pumping, and transportation of inputs and produce to markets. Kenya’s agricultural productivity and food security depend heavily on mechanization and efficient logistics, making fuel costs a significant determinant of farming economics and ultimately food prices that affect every Kenyan household. Even modest reductions in diesel prices can translate to meaningful cost savings for large-scale commercial farmers operating fleets of machinery and irrigation systems.
The manufacturing sector similarly benefits from fuel price reductions through lower costs for backup generators (essential given Kenya’s ongoing electricity supply challenges), transportation of raw materials and finished goods, and various industrial processes that rely on petroleum products as inputs. Manufacturing competitiveness—both domestically and for exports—depends partly on energy cost structures, with elevated fuel prices potentially pricing Kenyan manufacturers out of regional and global markets.
Transportation and logistics operators, who represent some of the most fuel-intensive businesses in the economy, stand to gain from even modest price reductions through lower operating costs that can potentially translate to reduced freight rates and improved service profitability. However, the competitive dynamics of Kenya’s transport sector often mean that cost savings are quickly competed away through price reductions rather than accruing as profits to operators, ultimately benefiting shippers and consumers rather than transport businesses themselves.
Implications for Inflation and Monetary Policy
Kenya’s inflation dynamics are closely tied to fuel price movements, as energy costs feed through into virtually all components of the consumer price index both directly (through transportation costs) and indirectly (through their impact on production and distribution costs for goods and services). The modest fuel price reductions announced by EPRA may contribute to continued subdued inflation, which has remained within the Central Bank of Kenya’s target range of 2.5-7.5 percent in recent months.
Kenya’s inflation rate has shown encouraging signs of stability, supported by falling prices of key household commodities and relatively stable fuel costs compared to the volatility experienced in previous years. The consumer price index has benefited from good agricultural production that has kept food prices—the largest component of the inflation basket—relatively contained, while energy price moderation has prevented the kind of cost-push inflation pressures that characterized earlier periods of sharp fuel price increases.
For the Central Bank of Kenya’s monetary policy stance, continued moderation in fuel and energy prices provides welcome support for maintaining accommodative interest rate policies without triggering inflation concerns. Lower fuel costs reduce the risk of second-round inflation effects where energy price increases feed into broader price pressures through their impact on transportation, production, and distribution costs across the economy.
However, the CBK remains vigilant about potential inflation risks from multiple sources including potential exchange rate depreciation (which would increase import costs including fuel), weather-related agricultural disruptions, or renewed increases in international oil prices if global market dynamics shift. The relatively modest nature of the current fuel price reductions suggests that EPRA is calibrating price adjustments cautiously rather than fully passing through international price declines, potentially maintaining some buffer against future volatility.
Future Price Outlook and Market Uncertainties
Looking ahead, the trajectory of Kenyan fuel prices will depend on several interconnected factors including global oil market dynamics, exchange rate movements, domestic policy decisions, and EPRA’s regulatory approach to price setting. Analysts suggest that continued stability in global oil markets and careful monitoring of exchange rates will be key in determining future fuel price movements, with potential for further modest reductions if current trends persist.
Global oil market fundamentals present a mixed picture for the months ahead. On the supply side, production increases from major producers including the United States, Brazil, and Guyana are adding substantial new barrels to global markets, while OPEC+ members face ongoing challenges in maintaining production discipline amid varying economic imperatives across member countries. These supply dynamics generally point toward well-supplied markets that should constrain price increases.
On the demand side, uncertainty about global economic growth—particularly in China, the world’s largest oil importer—creates potential headwinds for oil consumption. Slower economic growth in major economies could moderate demand growth for petroleum products, keeping pressure on prices. Conversely, any significant economic acceleration or supply disruptions from geopolitical tensions could quickly reverse the recent price declines and push costs higher.
For Kenya specifically, the exchange rate trajectory will prove critical in determining how international price movements translate into local pump prices. The shilling’s recent stability has provided a favorable environment for passing through global price declines to consumers, but any significant depreciation could quickly erode these gains. The CBK’s success in maintaining relative currency stability through foreign exchange reserve management and remittance inflows will help determine whether Kenyans can expect sustained relief or renewed pressure from currency-driven fuel cost increases.
EPRA’s regulatory approach and the broader policy environment will also shape fuel price outcomes. The authority’s monthly review framework provides a mechanism for orderly price adjustments that balance multiple objectives, but questions persist about whether the current pricing methodology fully captures and quickly transmits international price movements to consumers. Some analysts suggest that EPRA could adopt more transparent and formulaic approaches that reduce discretion and ensure more rapid pass-through of both price increases and decreases.
Broader Energy Sector Considerations
The fuel pricing dynamics occur within a broader context of Kenya’s evolving energy landscape and policy priorities. The country has made substantial investments in renewable energy, particularly geothermal power where Kenya has emerged as a global leader, as well as wind and solar capacity that reduces dependence on fossil fuels for electricity generation. These renewable energy investments help insulate the economy somewhat from oil price volatility, though transportation remains almost entirely dependent on petroleum products.
Kenya’s strategic challenge remains its 100 percent reliance on imported refined petroleum products, which creates fundamental vulnerability to global market fluctuations and supply chain disruptions. Unlike some countries that possess domestic refining capability or crude oil production, Kenya must import already-processed fuel from international markets, meaning any shifts in global supply, demand, or geopolitical stability directly translate into local market impacts without natural hedges or buffers.
The long-awaited development of Kenya’s crude oil reserves in Turkana County could potentially alter this dynamic if commercial production and export commence, though the timeline and ultimate scale remain subject to significant uncertainty. Even with domestic crude oil production, Kenya would still need to make substantial investments in refining infrastructure to convert domestic crude into usable petroleum products, or alternatively continue importing refined products while exporting crude—an economically inefficient arrangement.
In the meantime, policies to promote energy efficiency, public transportation, and gradual electrification of the vehicle fleet offer potential pathways to reduce petroleum dependence over the long term. Kenya’s Green Economy Strategy and Climate Change Action Plan envision significant shifts toward lower-carbon transportation modes and cleaner energy sources, though implementation faces substantial financial and infrastructural challenges.
Consumer Protection and Market Oversight
EPRA’s role as regulator extends beyond simply setting maximum retail prices to encompass broader oversight of market conduct, quality standards, and consumer protection in the petroleum sector. The authority monitors compliance with price ceilings, investigates consumer complaints, and enforces quality standards to ensure that Kenyans receive petroleum products that meet safety and performance specifications.
Recent initiatives have included enhanced surveillance of retail outlets to detect and penalize short-selling (where customers receive less fuel than they pay for), quality testing to prevent adulteration of petroleum products, and enforcement of proper measurement and dispensing standards at pumps. These consumer protection efforts aim to ensure that the regulatory price ceilings translate into actual benefits for consumers rather than being undermined by unethical practices.
Market structure and competition dynamics also factor into ultimate consumer outcomes. Kenya’s petroleum retail sector includes a mix of multinational oil companies, local independent retailers, and various distribution arrangements that create varying levels of market power and competitive intensity across different regions. EPRA’s oversight seeks to prevent anti-competitive behavior and ensure that the benefits of regulated pricing reach consumers regardless of which company or outlet they patronize.
The authority also grapples with ongoing challenges of illegal fuel smuggling and tax evasion that undermine the regulated market and create unfair competition. Smuggled fuel sold outside formal channels deprives the government of tax revenue while potentially exposing consumers to quality and safety risks. Enhanced enforcement and coordination with other agencies including Kenya Revenue Authority and the Directorate of Criminal Investigations aims to combat these illicit activities.
Conclusion and Path Forward
The January 2026 fuel price reductions by EPRA provide modest but welcome relief to Kenyan consumers who have endured extended periods of elevated energy costs that strain household budgets and business economics. While the magnitude of the decreases—Sh2 for petrol, Sh1 each for diesel and kerosene—falls short of consumer expectations given substantial declines in international oil prices, the reductions nonetheless represent a step in the right direction for an economy heavily dependent on petroleum products.
The path forward will require careful navigation of multiple challenges including global market volatility, exchange rate management, domestic policy considerations, and the fundamental structural challenge of complete dependence on imported refined petroleum products. EPRA’s monthly review framework provides a mechanism for responsive price adjustments, though questions persist about whether the current approach achieves optimal balance between protecting investors and consumers.
For Kenyan households and businesses, the modest price relief offers temporary respite but underscores the ongoing imperative for energy diversification, improved public transportation, and strategies to reduce petroleum dependence over the long term. As Kenya pursues its economic development and climate action goals, the fuel pricing dynamics will remain a critical variable affecting living costs, business competitiveness, and ultimately the nation’s economic prospects in an era of persistent energy market uncertainty.
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By: Montel Kamau
Serrari Financial Analyst
16th January, 2026
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