COVID-19: How the oil price crash impacts Kenya’s economy

The recent crash in oil prices has sent shockwaves through global markets, impacting economies worldwide. East Africa's biggest economy, Kenya, is not immune to these effects. The plummeting prices have had immediate negative impacts on oil and gas exploration activities in Kenya, particularly in the northern region. George Bodo, CEO of Call Street Research and Analytics Limited, shed light on the repercussions of this price crash in a recent interview with CNBC Africa. According to Bodo, the current price levels are making exploration activities unprofitable, with prices likely to fall below $20 per barrel. This has put companies like Tullow Oil, which operates in northern Kenya, in a challenging position, potentially leading to substantial losses. Additionally, the acquisition plans in the oil and gas sector are expected to take a pause until there is a recovery in crude prices. The ongoing coronavirus pandemic has also played a significant role in the decline of oil prices. The disruption in global supply chains and a sharp decline in energy consumption have contributed to the oversupply of oil, leading to full storage tanks and plummeting prices. In order for the oil sector to bounce back, economic activities need to pick up, production needs to resume, and energy consumption patterns must improve. Bodo predicts that once these factors start to come into play, both oil consumption and prices are likely to see an uptick.