Following the June 22^nd American attack on Iranian nuclear sites in support of Israel, the Iranian parliament has voted to block the Strait of Hormuz. The Strait of Hormuz is a vital trade route through which over a fifth of the world’s oil supply, equal to 20 million barrels, pass each day. The move if approved by the Iranian Security Council could spell a major disruption to oil imports from Saudi Arabia and The United Arab Emirates raising inflation rates for Kenya and many parts of the developing world.

Kenya imports all her oil and gas needs from Gulf oil producers through a government to government deal. If Iran makes true on its threat, the Strait of Hormuz will be unsafe for oil tankers and cargo ships. While alternative oil pipelines exist, their capacity is limited and the endeavor much more expensive. A spike in freight charges for oil and gas tankers will lead to higher landing rates of the commodity with the end consumer bearing the ultimate cost. 

The importance of affordable fuel and gas prices cannot be overstated in running of key sectors of the economy like transport, agriculture, manufacturing just to name a few. This might occasion a rise in inflation which hurts local businesses, slows economic growth and lowers the purchasing power of Mwananchi. Oil prices shocks also increase demand for foreign currency which weakens the shilling. Importantly, servicing of dollar dominated foreign loans will become harder, exacerbating Kenya’s debt crisis.

The government has spear headed renewable energy projects to supplement the national grid and instituted policy to encourage the uptake of electric vehicles in the Kenyan market as a strategic move to wean reliance on fossil fuels. In the short-term, the government could diversify its sources of oil while building a robust strategic reserve for the country.

While Kenya has no control over the war in the Middle East, a higher cost of living will have direct social economic repercussions on its citizenry. Previously, the country has witnessed civil protests and political unrest owing to high costs of living and it remains a thorny issue in every day conversations. Clear communication of external factors affecting the domestic environment is key to ensuring citizens understand issues of national interest and counters political bigots from weaponizing economic frustrations against the government of the day.