Oil Prices in 2020 – 3 Factors That Might Affect Fuel Prices in Kenya

oil prices in 2020

Oil prices in 2020 will be affected by a number of factors. But first, did you know that Lake Turkana, also known as Jade Sea, was originally named Lake Rudolf on 6th March 1888?

The lake was renamed Lake Turkana in 1975 by the then President, Jomo Kenyatta. Did you know that?

Now that I have your attention, Happy New Year!

Allow me to share with you my thoughts on what to expect in terms of oil prices in 2020. This is in turn going to affect your day to day life as you know it.

Oil prices in 2020 have recorded the strongest start to a calendar year since 2014, with crude oil opening at over $60 a barrel.

For the un-initiated, the prices of oil collapsed from almost $120 a barrel in June 2014 due to weak demand, strong dollar and a booming shale production in the United States.

I think there are three factors that will affect oil prices in 2020 in Kenya. They include the following;

Saudi Arabia and Russia will affect oil prices in 2020

The worlds biggest oil producers, Russia and Saudi Arabia, have continued to strengthen their collaboration in the oil and gas industry. This is one relationship that we should watch closely because it signals a strategic partnership between two oil-rich states.

Cooperation between Saudi Arabia and Russia ensures that crude prices are propped up.

Saudi Arabia is very intent on listing Saudi Aramco. As such the country is quite motivated to keep the oil prices going up. High crude oil prices means that the consumer fuel prices in Kenya will be high as well.

The risk to this outlook could become apparent if Russia stops cooperating which has been a significant tipping factor in the production cuts.

How will oil prices in 2020 be affected production cuts?

In a meeting at Vienna, Austria in May 2017, OPEC and non-OPEC producers agreed to continue with crude oil production cuts until the end of 2018.

The cuts which started in January 2017 are meant to clear the global over supply of crude oil.

It is also worth noting that the United States crude inventories have dropped by over 20% from the highs recorded in March last year.

The current deal among the producers is to cut supply by about 1,8 million barrel per day (bpd) in an effort to boost oil prices. However, there is high likelihood of another price collapse if the producers in the United States increase production due to higher prices.

The crude oil export limitation agreement between Russia and Saudi Arabia has been a success in strengthening the crude price and also in market rebalancing, removing the volatility out of the system.

Oil and Gas Project Sanction

It is forecasted that there will be an increase in projects from the 2015 low.

The continued recovery of the upstream companies will lead to an increase in their production. This is going to help the midstream and the oilfield services businesses. This is a boom to the supporting ecosystems

Within Kenya and East Africa, the oil and gas exploration companies will continue with their upstream activities motivated by rising oil prices, as well as embark on the development phase in Turkana in Kenya and Hoima in Uganda.

The proposed construction of 1,445 kilometer long crude oil pipeline will commence once FID is reached. From Hoima in western Uganda to Tanga sea port in Tanzania, the pipeline will carry 216,000 barrels of crude oil daily.

In Kenya will equally be speeding up the process that will see the construction of the crude oil pipeline from Turkana oilfields to Lamu.  A joint development study agreement has already been signed.

The 865 km pipeline will cost about $1.2 billion and expected to be complete by 2022

Moving Forward

During the 2014/2016 period, over $1 trillion was taken out of industry spending from 2015 to 2020. This means that cuts are over and upstream companies will seek to grow their profitability and operate at lower prices. Overall, this makes the industry better and more efficient.

Projects worth as much as $200 billion are in the pipeline, both onshore and offshore.

For example, Saudi Aramco has announced plans to invest $300 billion in upstream oil and gas projects over the next 10 years. With these investments, the oilfield services sector will to continue recovering in 2020 in tandem with the increase in the oil prices.

This bill introduces a raft of rules and guidelines into the country’s nascent upstream oil and gas industry, as a means of protecting and promoting local growth.

The global rise in crude oil prices will mean that you as a consumers and motorists will fork out much more from your pockets for fuel or petro-related products.

The average landed cost for the products increase with the increase in the crude oil prices. It would a double tragedy if the Kenyan shilling was to weaken during the course of the year.

The latest price update by the EPRA reflects these changes.


In conclusion, given the global and regional geopolitics as well as economics, 2020 promises to be very interesting in the upstream oil and gas industry.

Oil prices in 2020 will be keenly watched as this is a major contributor to the global energy matrix.

A major event, the upstream awards, continues to bring stakeholders in the oil and gas industry together in the country. Later in the year, upstream awards is coming to a city near you.

I am inviting you to celebrate with us.