Global oil prices plunged 24pc to a near three decade low in overnight trading on Sunday in the aftermath of a fall out between Russia and Saudi Arabia.
The last time the world experienced such lows was in 1991 when American forces launched air strikes on Iraqi troops following their invasion of Kuwait.
Saudi Arabia, the world’s top oil exporter, launched a price war over the weekend. This is after an alliance between Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) ended due to the coronavirus crisis.
The kingdom and Russia formed the OPEC cartel in 2016 after oil prices plunged to $30 (Sh3000) a barrel. Saudi Arabia went into bed with OPEC and the two leading exporters have orchestrated supply cuts of 2.1 million barrels per day since. Saudi Arabia wanted to increase the number of barrels to 3.6 million through 2020 to take account of weaker consumption.
However, OPEC failed to strike a deal with its allies, led by Russia, about these oil production cuts. That, in turn, caused Saudi Arabia to slash its oil prices as it reportedly looks to ramp up production.
The plunge in oil prices, however, comes as good news to net oil importers, Kenya included as it is indicative of future downward adjustment to pump prices.
The Energy and Petroleum Regulatory Authority (EPRA) is set to adjust its maximum pump prices on Saturday with all indicators pointing to a downward review to costs.
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