East African governments are eyeing a costly holiday season due to a possible spike in fuel prices triggered by a reduction in global crude supplies and rising transit tolls in the Canal. Suez.
Disruptions to international crude supplies caused by the military conflict between Russia and Ukraine have largely been blamed on soaring fuel prices, in addition to domestic taxes which constitute more than 50% of prices at the pump.
However, on October 5, the Organization of the Petroleum Exporting Countries (OPEC) and the non-OPEC ministerial meeting in Vienna, Austria, agreed to cut global oil production by two million barrels per day from November. , paving the way for higher crude prices.
Under the deal, which will last until December 2023, OPEC members will cut oil production by 1.27 million barrels per day while non-OPEC members will cut production by 727,000 per barrel.
Last week Brent crude rose 0.5% to $92.94 Last month the Suez Canal Authority announced that tolls for vessels using the waterway are set to rise 15% from January next year, with the exception of dry bulk carriers and cruise ships which will increase by 10 percent.
According to the Authority, the continued increase in crude oil prices above $90 per barrel and the increase in average liquefied natural gas prices above $30 per million thermal units have both led to a increase in the average prices of ships’ bunkers and therefore an increase in the savings that ships make by transiting the Suez Canal compared to other alternative routes.
According to the Authority, the increase is inevitable and a necessity in light of the current global inflation rates which have reached more than 8%, which translates into an increase in operating costs and costs of navigation services. provided in the channel.
The Suez Canal offers a significantly shorter route between Asia and Europe with the alternative of rounding the Cape of Good Hope.
High oil prices as well as limits on Russian oil exports have increased the cost of importing refined oil and thus put pressure on African foreign exchange markets, with the largest net importers such as Kenya being the most affected. In Kenya, the economy is struggling with a fragile recovery largely due to the high cost of living caused by rising food and fuel prices, biting drought, high debt levels and the weakening of the shilling.