Oil prices surged Tuesday, February 22, 2022, on fears that rising tensions between Ukraine and Russia could disrupt supplies around the world.
Brent, the international benchmark for oil, is now trading at Ksh.11,372.01 a barrel, its highest level since 2014, as military tanks and carriers were seen on the outskirts of Donetsk, the capital of one of two independent regions of Eastern Ukraine.
On January 25, oil prices rose on worries about supply disruption amid rising tensions in Eastern Europe and the Middle East.
The then uptick in oil price was on the back of the United Arab Emirates’ interception when it destroyed two Houthi ballistic missiles targeting the Gulf country.
The crisis over Ukraine has added further support to an oil market that has surged due to tight supplies as demand recovers from the coronavirus pandemic.
The Organization of the Petroleum Exporting Countries (OPEC) has resisted calls to boost supply more rapidly.
The conflict has fueled a seven percent increase in natural gas prices despite assurances from Putin that Russia will continue to deliver uninterrupted natural gas supplies to world markets.
Russia is the world’s largest exporter of natural gas and produces 12 percent of the world’s oil and Kenya being a major importer of petroleum products means that higher oil prices will increase the demand for a US dollar.
Ongoing tension in two Asian nations has already seen the Shilling weaken further to trade at Ksh.113.69 against the dollar.
Further depreciation of the shilling would make the import of goods and services more expensive thus amounting to a jump in the inflation rate.
Inflation eased to 5.4 percent in January, easing slightly from December’s 5.7 percent. January’s figure marked the lowest inflation rate since August 2020.
Gold, which was already soaring prior to the Ukraine crisis, hit a peak of eight months, surging by more than Ksh.216,079.02 per ounce.
Aluminum hit a more than 13-year high of Ksh.380,981.43 a tonne while benchmark nickel prices reached the highest level since August 2011