Oil Market Outlook: IMF Predicts Lower Prices in 2027 Ahead of EPRA Review

Global oil prices could ease next year after a sharp increase linked to the conflict involving the United States, Israel and Iran. However, the International Monetary Fund (IMF) expects crude oil to remain more expensive than it was before the war began.

The IMF projects an average oil price of $95.74 per barrel in 2026, before falling to $87.39 in 2027. At the exchange rates cited in the earlier estimates, these figures translate to approximately KSh12,428 and KSh11,344 per barrel, respectively.

Kenya's Next Fuel Price Review Approaches

Motorists and businesses in Kenya are waiting for the next announcement from the Energy and Petroleum Regulatory Authority (EPRA), covering the period from October 15 to November 14. The review will determine whether changes in international oil markets translate into adjustments at local fuel stations.

In Nairobi, the current maximum retail prices are KSh214.03 per litre for Super Petrol, KSh217.86 for Diesel and KSh191.38 for Kerosene. These rates will provide a reference point for consumers assessing the upcoming changes.

However, lower international crude prices do not necessarily lead to immediate reductions at the pump. Import costs, shipping charges, currency movements, taxes and other elements of Kenya's pricing formula also affect the final prices paid by consumers.

Russia's Supply Pledge Raises Hopes of Relief

International oil prices weakened on Tuesday, October 13, following an announcement by US President Donald Trump that Russia would supply diesel to international markets. The United States also temporarily eased sanctions on Russian fuel, raising expectations that additional supplies could reduce pressure on the market.

The latest developments came after oil prices had climbed by more than 70 per cent during 2026. Before the conflict began on February 28, Brent crude had traded at around $70 per barrel, although prices fluctuated from day to day.

The IMF's projections suggest that some of the increase could be reversed next year. Nevertheless, the expected 2027 average would remain more than $17 above the pre-war level cited in the forecast.

Security Threats Could Disrupt the Forecast

The prospect of cheaper oil remains vulnerable to further geopolitical tensions and interruptions to international shipments. Reports of attacks linked to Iran-aligned Houthi forces and incidents involving tankers near the Strait of Hormuz have continued to raise concerns about supply security.

The Strait of Hormuz is a major passage for global oil shipments, making any prolonged disruption a potential threat to international supply. A fresh escalation could push prices higher and weaken expectations of a sustained decline.

For Kenya, which relies on imported petroleum, movements in international markets remain important to the cost of fuel and transportation. Whether consumers experience relief in 2027 will depend not only on crude oil prices but also on currency movements, import expenses and developments in the conflict.