Falling crude prices raise hopes for relief in local fuel prices

Global crude prices fell for the second straight month, raising hopes for many African countries, including Uganda, of lower fuel prices.

Since mid-June, global crude prices have fallen 22.5%, paving the way for reduced pressure on local pump prices.

However, the fall has yet to be reflected in Uganda, although a number of countries around the world are recording an average that falls to around $4 per gallon, returning to the lowest level since March.

Crude prices fell to an average of $95 a barrel – levels last seen before Russia invaded Ukraine.

Mr. Peter Ochieng, a regional fuel expert, said on Friday Monitor that it was early to expect a change in local pump prices, noting that the change could come next month.

“If this trend continues, we could see better prices in Uganda around mid-September,” he said, noting that a peaceful and smooth transition of leadership in Kenya, which is the main road for l Uganda to and from the port of Mombasa, was also an important element. fundamental.

Local fuel prices have since the start of the year increased by an average of 53%, according to data from the Uganda Bureau of Statistics.

Yesterday, dealers quoted petrol prices at 6,500-6,700 shillings in Kampala, while diesel was selling for 6,450-6,500 shillings per litre.

The above prices increased by an average of Shs 4,500 for petrol and Shs 4,300 for diesel for every liter of diesel in December last year.

The increase in fuel prices therefore passed through to commodity prices, creating a surge in inflationary pressures, forcing inflation to rise to 7.9%.

Stabex spokesman Mr Gilbert Otim said on Friday that Uganda does not refine crude so it was unclear how movements in international markets will affect local prices.

“We cannot know if this will have an impact on local pump prices. Cruel is subject to refinement and there are so many costs involved. It’s too early to tell, he said, it’s a whole chain that goes through bulk dealers before getting to retailers for distribution.

“So we can’t predict price stability due to so many fundamentals involved which the dollar is still volatile,” Otim said.

In case of eventuality

Asked if the company has enough inventory to withstand any eventuality including election related violence in Kenya, Mr Gilbert Otim said that over the past one and a half year they have been using the corridor central (Dar es Salaam-Mutukula) to transport products, which could be an alternative to the investment of any chaos.

Uganda has a 30 million liter fuel storage facility at Jinja, holds reserves equivalent to four to six days of fuel stocks, corresponding to daily consumption of 6.5 million liters, but does not hasn’t been stored for years.

In practice, the reserves – which fall under the state-owned Uganda National Oil Company (UNOC) – have remained largely empty.

In 2017, UNOC set out to rehabilitate the reserves when it entered into a joint venture agreement with a number of companies such as One Petroleum and Mbaraki Bulk Terminal.

About Mallory Brown

Check Also

Dow drops 300 points as traders fret over FedEx warning, Wall Street heads for big weekly loss

Stocks fell on Friday as Wall Street headed for a big losing week, and traders …