CBK Report Reveals Drop in Global Oil Prices Amid U.S.-Iran Talks

The international price of oil went down in the week ended June 4, 2026, due to increased optimism about the continuing peace negotiations between the US and Iran.

The fall in oil prices came following the favorable reaction by investors regarding these peace talks, which alleviated fears of possible disruptions in the oil supply chain.

According to the Central Bank of Kenya(CBK), the price of Murban crude oil came down to USD 87.38 (Ksh 11,302.60) per barrel on June 4 from USD 88.48(Ksh 11,444.89) per barrel on May 28.

“International oil prices fell as investors responded to renewed optimism surrounding the ongoing U.S.-Iran peace negotiations. Murban crude oil price decreased to USD 87.38 per barrel on June 4, from USD 88.48 per barrel on May 28,” the CBK bulletin stated.

Global Inflation Pressures Remain Elevated

Despite the decline in oil prices, inflation concerns continued to dominate major global economies.

The CBK noted that inflation in the Euro Area increased to 3.2% in May from 3.0% in April, largely driven by higher energy prices.

Core inflation in the region also rose to 2.5% from 2.2% over the same period.

Germany, however, recorded a slight easing in inflation, with the rate declining to 2.6% in May from 2.9% in April.

In the United States, weekly initial jobless claims rose to a four-month high, exceeding market expectations despite signs of continued labour market stability.

“The U.S. Dollar Index strengthened by 0.4 percent during the week,” CBK said.

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Kenya Inflation Climbs to 6.7 Percent

Locally, Kenya’s overall inflation increased to 6.7% in May 2026 from 5.6% in April, mainly due to rising energy prices and transportation costs linked to elevated global oil prices.

The CBK indicated that core inflation rose to 3.2% from 2.8%, while non-core inflation increased significantly to 16.0% from 13.4% during the same period.

“Overall inflation increased to 6.7 percent in May 2026 from 5.6 percent in April 2026, mainly driven by higher energy prices and transportation costs arising from the elevated global oil prices,” the report noted.

Meanwhile, the Kenya Shilling remained stable against major international and regional currencies during the week ending June 4.

The local currency exchanged at Ksh 129.37 per U.S. dollar on June 4, compared to Ksh 129.52 recorded on May 28.

Foreign exchange reserves remained adequate at USD13.2 billion (approximately Ksh 1.71 trillion), equivalent to 5.6 months of import cover, comfortably above the statutory requirement of four months.

Financial Markets Show Mixed Performance

According to the bulletin, Kenya’s money market remained liquid during the week, supported by active open market operations.

Commercial banks maintained excess reserves averaging Ksh 16.0 billion above the statutory Cash Reserve Ratio requirement.

“The Kenya Shilling Overnight Interbank Average Rate (KESONIA) remained unchanged at 8.75 percent on June 4, the same level recorded on May 28,” CBK stated.

Activity in the interbank market, however, slowed.

The average number of transactions declined to 17 from 24 the previous week, while the average value traded fell to Ksh 10.7 billion from Ksh 18.6 billion.

The government securities market continued to attract strong investor interest.

Treasury bill auction held on June 4 received bids totaling Ksh 54.6 billion against an advertised amount of Ksh 24.0 billion, translating to a performance rate of 227.4%.

Interest rates on the 91-day, 182-day and 364-day Treasury bills increased marginally.

Similarly, the reopened 15-year and 25-year Treasury bond auction conducted on June 3 attracted bids worth Ksh 34.4 billion against an advertised amount of Ksh 40.0 billion, achieving an 86% performance rate.

Also Read: CBK Report: Global Oil Prices Surge as Kenya Shilling Holds Steady

Stock Market Gains as Bond Turnover Declines

At the Nairobi Securities Exchange (NSE), major share indices posted gains during the week ending June 4.

The NASI, NSE 25 and NSE 20 indices rose by 1.78 percent, 2.20% and 1.49% respectively.

Market capitalization, total shares traded and equity turnover also registered significant growth, increasing by 1.78%, 104.02% and 132.29%, respectively.

In contrast, activity in the domestic secondary bond market weakened, with bond turnover declining by 31.37% during the week.

Internationally, yields on Kenya’s Eurobonds fell by an average of 6.11 basis points, reflecting improved investor sentiment in sovereign debt markets.

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CBK Governor Kamau Thugge. PHOTO/CBK