Global oil prices keep rising as Middle East crisis continues

The ongoing conflict in the Middle East is causing concern in Kenya as the region faces the possibility of a reversal in the recent improvements in fuel costs and inflation. The World Bank has issued a warning that a further escalation of the conflict could potentially push crude oil prices above $100 a barrel, which would have significant repercussions on the Kenyan economy. Martin Chomba, Chairman of the Petroleum Outlets Association of Kenya, joined CNBC Africa to discuss the potential impact on the country. Chomba highlighted the current challenges facing Kenya due to disruptions in the supply chain for fuel. He pointed out that rebel activities in Yemen have made it difficult for vessels to transport fuel to Kenya efficiently, leading to increased transport costs and insurance premiums. These rising costs are a cause for concern as Kenya relies heavily on oil imports from the Middle East, particularly from countries like Saudi Arabia and the United Arab Emirates. The geopolitical tensions between Iran and Saudi Arabia are also contributing to the uncertainty surrounding oil prices in the region. The uncertainty in the Middle East poses a significant risk to Kenya's economy, with Chomba noting that any further escalation of the conflict could lead to a surge in oil prices. He warned that if the tensions in the region were to escalate to a full-scale conflict involving key players like Israel, Palestine, Hezbollah, and other groups, oil prices could skyrocket to around $120 per barrel. The disruption in the supply chain caused by such a conflict would drive up demand and push prices higher, creating challenges for consumers in Kenya. Despite the looming threats, Chomba acknowledged that the current exchange rate of the Kenyan shilling against the dollar has provided some temporary relief. However, he emphasized that this might not be enough to shield the country from the potential impact of rising oil prices. Consumers in Kenya are being advised to prepare for possible price increases and to tighten their belts in anticipation of higher costs for essential goods and services. In conclusion, the growing tensions in the Middle East are a cause for concern for Kenya, with the threat of rising oil prices and inflation looming large. As the country remains dependent on oil imports from the region, any further escalation of the conflict could have far-reaching consequences for the economy. Consumers are urged to stay informed and be prepared for potential price hikes in the near future as the situation continues to unfold.