Analysis; Why global oil prices drop to 1992 barrel cost but pump price remains -Kenya

EPRA Director-General Mr Pavel Oimeke.

International Oil prices drop further than the price of crude oil since witnessed in 1992. January 2020, 1 barrel was trading at USD 50. Now it is trading at USD 20, the same price in 1992.



The United Arab kingdoms and Russia came together to form the so-called OPEC+ alliance in 2016 after the oil prices plunged to $30 (Ksh 3073) a barrel. -- 1 barrel has 158 litres of crude oil.


Due to advisories, the Saudi Arabia government has decided to fight for greater market share by slashing the prices its preferred customers pay by between $4-$7 (Ksh 409-Ksh 717)a barrel.


Today, the Gulf countries produce oil at the lowest cost estimated at $4-$7 a barrel in Saudi Arabia, Kuwait and the United Arab Emirates due to the coronavirus world disaster according to CNN report.


Rusian countries sell at $10-$15 (KSh 1024-Ksh 1536)per barrel.


Where OPEC harmonised the price at $20 -$25 (Ksh2049-Ksh2561) for the international markets with a slight profit. The little profit is said to get back to the oil nations in support of the coronavirus preparations.

Russia President with Saudi Arabia King. PHOTO | CNN

This is after Saudi Arabia- the second-largest oil producer in the world and a member of the Organization of the Petroleum Exporting Countries (OPEC) controversially discounted its oil stocks in reaction to Russia’s refusal to back sharp cuts to production.


The benchmark Brent crude oil price fell below $34 (Ksh.3490.78) before picking up slightly to return north of $35 (Ksh.3593.45) at dawn on Monday to mirror a near 22 per cent plunge.


According to data from the International Energy Agency (IEA), China is set to see a massive 1.8 million barrels per day (B/PD) slash to oil demand in the first quarter to the end of March as factories shut down while large-scale confinement measure curb travel.


The drop is expected to set-off a decline in global oil demand by around 90,000 barrels a day in the first annual fall since 2009.


The Energy and Petroleum Regulatory Authority (EPRA) is set to adjust its maximum pump prices with all indicators pointing to a downward review to costs.

Pump Prices in Kenya to remain for days.

During its February 14 review, EPRA impacted a Ksh.2.67 and Ksh.2.13 increase in the cost of petrol and diesel per litre while the cost of kerosene reduced by Ksh.1.26 a litre.


However, EPRA maintains that the price will remain as it is because of the oil stock already available in the country.


According to the EPRA Director-General Mr Pavel Oimeke, the oil that is already in the country will take several days. Importation of oil will be done after consultation with other agencies in support of the fight against coronavirus.