Fuel prices rose sharply in Rwanda this week, reflecting a global trend that's largely blamed for rising cost of living around the world.
The price of a litre of petrol is now at Rwf1,822 up from Rwf1,639, with diesel also increasing from Rwf1,492 to Rwf1,662 a litre.
The Rwanda Utilities Regulatory Authority attributed the increase to fluctuations in the global oil market, with reports linking recent surges in oil prices to decisions by Saudi Arabia and Russia to cut back on their supplies to the global crude market.
ALSO READ: Fuel prices rise following adjustments in global oil market
Both China and Western nations are also affected by the high oil prices and are determined to employ every available means to drive prices back down.
According to reports, going forward, the price of oil will be determined by the willingness and ability of the two interest groups to influence prices.
ALSO READ: Oil prices up by over 2 per cent following Saudi and OPEC cuts
The recent Oil Market Report (OMR) released in August states that the world oil demand is scaling record highs, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity.
The report further highlights that global oil demand is set to expand by 2.2 million barrels of crude per day to 102.2 million barrels of crude per day in 2023, with China accounting for more than 70 per cent of growth.
With the post-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiency standards and new electric vehicles weigh on use, growth is forecast to slow to 1 million barrels of crude per day in 2024, according to the report.
Following Russia&039;s invasion of Ukraine in February 2022, oil prices soared, hitting more than $120 a barrel in June 2022. They fell back to a little above $70 a barrel in May 2023, but have steadily risen since then as producers have tried to restrict output to support the market.
ALSO READ: Global oil prices fall to below $60
Haitham Al Ghais, the secretary general of Opec+ on Tuesday, October 3, told BBC that the demand for oil will continue to grow and remain "resilient" this year.
Opec+ is a group of 23 oil-exporting countries that decides how much crude oil to sell on the world market. The group accounts for around 40 per cent of the world's crude oil and its decisions can have a major impact on oil prices.
"We see demand growing about 2.4 million barrels a day,” Ghais said.
In July, Saudi Arabia announced that it would be cutting its production of crude oil by a million barrels a day to boost prices. Other members of Opec+ also agreed to continued cuts in production in an attempt to shore up flagging prices.
The International Energy Agency (IEA) highlighted that the decision by Saudi Arabia and Russia to cut production could cause a "significant supply shortfall” by the end of 2023.
In September, The East African reported that East African economies were going through a fresh spike in fuel prices after Saudi Arabia and Russia agreed to extend by three months the removal of 1.3 million barrels of crude per day from the global market in a move that has seen crude price jump by 18 per cent to $90 per barrel, the highest since November 2022.
In the same month, the global price for the benchmark Brent crude surged by 18 per cent to $90.04 per barrel from $76.47 in June.
Soaring fuel prices in Africa pose significant challenges for economies and households. According to Business Insider Africa, the removal of subsidies, tax increases, and global oil price fluctuations contribute to fuel price hikes across the countries.
For instance, Kenya in July grappled with high fuel costs, impacting citizens and businesses. Reports say that the surge was triggered by a 16 per cent increase in Value Added Tax (VAT). This VAT hike resulted in higher pump prices, burdening consumers.