Oil prices fall as US-Iran ceasefire eases pressure on Kenya's economy

The United States and Iran signed a preliminary ceasefire agreement, triggering one of the largest drops in oil markets in months. The turnaround came after months of market disruptions since the conflict started in February. 

The effect of the ceasefire agreement has begun to reflect in Kenyan oil prices, offering temporary relief to individuals and businesses after months of high energy costs. 

The decline in crude oil prices influenced Kenyan fuel prices, with EPRA lowering pump prices for the 15 June to 14 July pricing cycle.

According to the CBK's weekly bulletin, Murban crude, the benchmark used to price Kenya's imported fuel cargoes, fell by more than 10 USD per barrel in a single week following the ceasefire announcement.  

“Murban crude oil prices declined to 74.41 USD per barrel from 84.60 USD per barrel a week earlier.” 

The positive change could help ease inflationary pressure that intensified as transport and energy costs rose, triggered by disruption to oil shipments through the Strait of Hormuz. 

The best oil pricing just got better

Save 69.4% on every USOil trade.

Register now

*

69.4% USOIL claim based on comparison of the average pricing in the last week of 05.2024 vs last week of 08.2025.

Ceasefire deal and the fuel price response

Talks between the two countries were mediated by Pakistani Prime Minister Shehbaz Sharif, and after they concluded, the memorandum of understanding came into effect immediately, with Iran reopening the Strait of Hormuz. 

Following the announcement, Brent crude fell sharply as traders priced in the reduced risk of supply disruption. The EPRA reduced the price of diesel by 10.00 KES per litre in Nairobi, bringing diesel to 222.86 KES per litre. The authority cut super petrol by 0.22 KES per litre, bringing the price to 214.03 KES per litre.

In a bid to subsidize diesel and kerosene prices during the 15 June to 14 July pricing review period, the government also committed approximately 10 billion KES from the Petroleum Development Levy Fund. President William Ruto cited the need to protect households from the cumulative economic effect of months of elevated energy costs.

“These interventions have protected millions of Kenyans from even more severe economic hardships. I have further directed that in the next pricing cycle, we are going to reduce the price of diesel by a further 10 KSh to help stabilize pump prices and provide additional relief to consumers,” Ruto said. 

Since Kenya imports most of its petroleum products, movements in global crude markets tend to influence domestic pricing relatively quickly. If international oil prices remain weak, further reductions in Kenyan fuel prices are possible in coming pricing cycles.

How will Kenyan fuel prices affect inflation and the shilling?

Higher fuel prices drove inflationary pressures in several sectors, pushing up transport, manufacturing, and food distribution costs.

Kenya’s import costs also depend on the direction of the US dollar, since a stronger DXY can offset some of the benefit of lower oil prices for countries purchasing fuel in dollars.

The Kenya National Bureau of Statistics (KNBS) reported an annual inflation rate of 6.7% in May 2026, the highest in two years. The transport sub-index rose 16.5% year-on-year, while food and non-alcoholic beverages climbed 9.4%.

A drop in diesel prices may help reduce transportation costs for manufacturers, wholesalers, farmers, and logistics firms. 

Lower operating costs may help moderate price increases for consumer goods and essential services.

However, inflation will continue to depend on several factors, including food production, weather conditions, and international commodity markets. Oil represents one important component rather than the sole driver of overall consumer prices.

Implications of the US-Iran ceasefire for forex traders 

The US-Iran ceasefire is a good example of how geopolitical news can impact commodity markets, currencies, and investor sentiment. When oil prices rise, oil-exporting countries typically benefit from higher revenues, while oil-importing countries such as Kenya face higher import costs. The reverse applies when prices fall.

Following the ceasefire, market participants adjusted their inflation, monetary policy, and economic growth forecasts for different regions following the global decline in oil prices.

For traders, lower oil prices could dampen demand for safe-haven assets if geopolitical risks continue to ease. Commodity prices have been steady, given the ongoing uncertainty in the global economy and volatility in the currency market.

While the recent price declines have improved sentiment, markets remain cautious. The ceasefire agreement is a diplomatic step, but not a permanent solution to the geopolitical tensions. This means that oil markets may remain volatile despite improvements in sentiment. 

Forex participants may need to monitor geopolitical headlines alongside economic indicators such as inflation, interest rates, and central bank decisions. The conflict in the Middle East has illustrated how distant geopolitical events can shape local economic conditions. 

Provided there are no incidents in the Strait of Hormuz and global crude demand strengthens, oil prices may stabilize at lower levels in the second half of the year.

However, even the perception of a potential disruption to the Strait of Hormuz can push Kenyan oil prices higher, leaving Kenya exposed as a net fuel importer. 

Conclusion

The decline in Kenyan oil prices following the US-Iran ceasefire is a relief after months of elevated fuel costs driven by geopolitical uncertainty. The US-Iran ceasefire agreement has lowered international crude prices, and this has already translated into reduced Kenyan fuel prices. 

However, the outlook remains tied to developments in the Middle East and the global energy markets. 

For forex traders, monitoring geopolitical events alongside central bank policy, inflation data, and commodity trends is essential, as these factors often shape currency and financial market performance well beyond the oil sector.

To get more information on the ceasefire agreement and its impact on the market, visit Exness Insights. Traders can visit the Exness Blog page to stay up to date on the Kenyan forex market.