Kenyan households are bracing for another round of increased cooking gas bills following Saudi Aramco's sharp price hikes for butane and propane, the primary components of liquefied petroleum gas (LPG). According to industry executives, these price increases will directly impact Kenyan consumers. Saudi Aramco's latest market data reveals a 25.8% rise in butane prices to $628, and a 23.2% increase in propane prices to $494.
The price surge is attributed to the ongoing conflict in the Middle East, which has disrupted LPG exports. Attacks on Saudi Arabia's Yanbu terminal by Houthi rebels have severely curtailed shipments, pushing contract prices higher. As a result, Kenyan importers will face increased costs, which will likely be passed on to consumers. Industry executives confirm that LPG prices in Kenya are expected to rise next month due to the Saudi Aramco price hikes.
The impact of the price increase will be felt across Kenya, particularly among households that rely heavily on LPG for cooking. Currently, TotalEnergies Marketing sells a 13-kilogramme cylinder at KSh 3,510, while Rubis Energy retails the same size at KSh 3,025. These prices are already down from May, when they had jumped by more than KSh 390 following an earlier Saudi Aramco price increase.
Unlike diesel, petrol, and kerosene, whose retail prices are regulated by the government, LPG costs in Kenya are entirely set by private market forces. This leaves consumers with no price ceiling as a buffer against global shocks. Fuel dealers have warned that petroleum prices beyond LPG are also set to increase next month, adding to the broader cost pressures facing Kenyan consumers.
The conflict in the Middle East has had a significant impact on global LPG prices. The Strait of Hormuz, a critical shipping route, has been paralysed due to the conflict between the United States and Iran. As a result, Saudi Arabia has had to rely on alternative export routes, such as the Yanbu port, which has been targeted by Houthi rebels.
The disruption to LPG exports has resulted in a significant decline in shipments from Yanbu to Asian markets. Exports collapsed from 302,600 tonnes in June and 240,300 tonnes in July to just 71,200 tonnes last month, with volumes forecast to fall further to 51,700 tonnes in September. This has forced Saudi Aramco to raise contract prices to reflect the tighter supply situation.
Kenyan households will face increased financial pressure due to the rising cost of living. The price hikes will compound existing cost pressures, particularly for low-income households that rely heavily on LPG for cooking. The government has not announced any measures to mitigate the impact of the price hikes, leaving consumers to bear the brunt of the increased costs.
Key points
- Saudi Aramco's price hikes for butane and propane will lead to increased cooking gas prices in Kenya.
- The Middle East conflict has disrupted LPG exports, pushing contract prices higher.
- Kenyan households will face increased financial pressure due to the rising cost of living.
