Diesel Warning: Brent Eases to KSh 13,656.69 ($105.10) as IEA Sees Shortage Lasting Into 2027Diesel Warning: Brent Eases to KSh 13,656.69 ($105.10) as IEA Sees Shortage Lasting Into 2027
Key Highlights
- Brent crude fell 0.77% to KSh 13,656.69 ($105.10) a barrel on Friday morning, yet stayed on course for a weekly gain of 0.32% as the Iran war entered its eighth month.
- The International Energy Agency said the global diesel shortage will last well into 2027, with depleted inventories not expected to recover until the second half of that year.
- For Kenya, diesel drives transport and freight costs, so the 90-day fuel VAT extension and the EPRA review due by 14 November are the next pressure points.
Brent crude eased 0.77% to KSh 13,656.69 ($105.10) a barrel on Friday morning, but the International Energy Agency (IEA) has warned that the global diesel shortage caused by the Iran war will last well into 2027.
The warning matters for Kenya because diesel moves freight, buses and farm produce, and the country imports its refined fuel. Brent was still up 0.32% on the week, and US benchmark WTI fell nearly 1% to KSh 12,609.38 ($97.04) while on course for a weekly gain of more than 5.6%, according to The National's market report.
What the IEA said about diesel
The IEA said on Wednesday 14 October that depleted diesel inventories are not expected to recover until the second half of 2027. On Thursday it added that its March pledge to release crude stocks will exceed its target and that it will speed up the release of the remaining supplies.
Group of Seven members pledged this month to release 100 million barrels of diesel and other reserves to support the coordinated stock release. Last week the Trump administration lifted sanctions to let Russia supply millions of barrels of diesel to global markets, The National reported.
Vortexa counted 82 ship-to-ship transfers in India's Gulf of Kutch last month, equal to about 680,000 barrels a day. Refined products made up about 65% of the volume, with crude the rest.
What it means at the pump
Mwenendo earlier reported on how Brent held near KSh 13,703 ($105.46) as the IEA flagged lowest onshore stocks in a decade. Today's move is a small dip, not a break in the trend.
Kenya's pump prices are capped until 14 November. The Energy and Petroleum Regulatory Authority (EPRA) sets the monthly ceilings, and Mwenendo reported that the Nairobi petrol ceiling rose KSh 12.93 ($0.10) a litre in the current cycle.
As Mwenendo reported on Friday, President Ruto extended the 8% VAT on fuel for 90 days. The IEA's diesel outlook means the tax relief and crude prices will pull in opposite directions when EPRA publishes its next review. No sources reviewed say what the review will decide, so Mwenendo has made no forecast for pump prices.
Norbert Rucker, head of economics and next-generation research at Julius Baer, said current price levels "still seem to be somewhat lofty" relative to market conditions. He added that the Iran war has mainly erased the surplus built up in 2025 rather than creating a deficit.
The next markers are the IEA's stock releases and the EPRA review, which will show how far a diesel shortage that analysts expect to last into 2027 reaches Kenyan transporters.
In Summary
- Who issued the warning?
- The International Energy Agency, which said the diesel shortage will last well into 2027.
- What happened to prices?
- Brent fell 0.77% to $105.10 and WTI fell nearly 1% to $97.04, both on course for weekly gains.
- When does the shortage ease?
- Inventories are not expected to recover until the second half of 2027.
- Where does it hit Kenya?
- Through imported diesel used in transport and freight, with pump prices capped until 14 November.
- Why is supply tight?
- The Iran war, now in its eighth month, has disrupted energy supplies.
- How are governments responding?
- G7 members pledged to release 100 million barrels, and the IEA is speeding up its stock release.