Oil prices are expected to remain significantly higher through 2026, with the International Monetary Fund (IMF) projecting an average petroleum spot price of $89 (Sh11,501) per barrel.
The record is well above the roughly $70 (Sh9,045) per barrel levels seen before the outbreak of the Middle East conflict in February.
“Energy prices are projected to remain higher than they were before the war,” the IMF said in its latest World Economic Outlook update.
It adds that the revised projection is nine per cent higher than it had anticipated in April, reflecting persistent energy market disruptions that are expected to keep fuel prices elevated and sustain inflationary pressures across the global economy.
For oil-importing countries such as Kenya, the outlook points to continued pressure on fuel import bills and the cost of living despite easing geopolitical tensions.
The latest forecast is, however, well below the sharp spike witnessed earlier this year when fears of disruptions to global energy supplies pushed oil prices to nearly $120 (Sh15,506) per barrel.
Before the conflict erupted, benchmark Brent crude had been trading at about $70 (Sh9,045) per barrel, with prices now gradually easing from their peak but still expected to remain substantially above pre-war levels.
The petroleum spot price index is widely regarded as a barometer of global oil costs.
It measures the real-time cash price paid for physical crude oil for immediate delivery, rather than futures contracts for delivery at a later date.
Beyond crude oil, the IMF expects broader energy markets to remain under pressure, with natural gas prices also projected to stay elevated.
Gas prices are forecast to average $15 (Sh1,938) based on the Dutch Title Transfer Facility (TTF) benchmark, representing a five per cent increase from the estimate made in April.
The TTF is a key European benchmark that tracks wholesale natural gas prices and serves as a reference point for global gas markets.
Similar to how Brent crude provides a benchmark for oil prices, the TTF reflects prevailing market prices for natural gas traded in Europe and is widely used by buyers, sellers and energy companies when pricing gas contracts.
Compared with 2025, crude oil prices are expected to increase by 32 per cent in 2026, while natural gas prices will be 22 per cent higher.
The lender further projects fertiliser prices to rise by 26 per cent, with higher energy, fertilizer and transport costs pushing global food prices up by eight per cent this year.
Consequently, the lender reckons that these inflationary pressures are likely to keep monetary policy tighter for longer, with central banks in major economies expected to maintain relatively restrictive interest rate settings even as global economic activity slows.
Fiscal policy is also expected to tighten gradually across emerging markets and developing economies, while current global trade policies, including tariffs, are assumed to remain in place throughout the forecast period.
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