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TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.
Tensions in the oil-rich Middle East have escalated once more following Iran's attack on Israel over the weekend.
According to market analysts, fuel prices might skyrocket if the crisis worsens and interrupts global supply.
Tehran responded to what it believed to be an Israeli attack on an Iranian diplomatic facility in Syria on April 1 by firing a large number of missiles at Israel on Saturday, April 13.
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According to the Israeli military, "99%" of the more than 300 projectiles were intercepted.
CNN reported that oil prices spiked on Friday, April 12, to levels not seen since October 2023 in anticipation of an escalation of war, but they were subdued on Monday, April 15.
FX Pesa lead market analyst Rufas Kamau noted the cost of Brent oil dropped by 0.47% but was still trading at $89 (KSh 11,748) per barrel, a 16% rally year-to-date.
"Early this week, the de-escalation efforts between Israel and Iran gained ground. Brent oil dropped 0.47% but is still trading at $89, a 16% rally year-to-date. The Kenya shilling has gained 19.72% against the dollar in the same period, which means that the forex gains more than offset the oil price rally," Kamau told TUKO.co.ke.
Kamau opined that fuel hikes could occur in the coming months if the shilling starts to lose ground against the United States (US) dollar and the oil price rally continues above $90 (KSh 11,925) per barrel.
The conflict between Iran and Israel jeopardised the security and ambitious plans of Gulf nations to restructure their economies.
The threat of a regional conflict prompted leaders of the resource-rich Gulf monarchies to launch a swift diplomatic offensive.
The desert nations are situated on the other side of the Gulf from Iran, putting them right in the centre of the most recent crisis following months of unrest brought on by the Israel-Hamas conflict in Gaza.
Proofreading by Asher Omondi, current affairs journalist and copy editor at TUKO.co.ke.
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