Kenya’s petroleum sector recorded steady growth in the first quarter of 2026, buoyed by stable macroeconomic conditions, stronger transport activity and increased household consumption, despite persistent challenges facing oil marketers.
According to the latest report by the Petroleum Institute of East Africa (PIEA), total petroleum consumption rose by 5.4 per cent to 1.65 million cubic metres, equivalent to about 1.7 billion litres, between January and March 2026. This compares with 1.57 million cubic metres or 1.6 billion litres consumed during the same period in 2025.
The increase reflects continued economic resilience even as businesses navigated higher taxes, rising operating expenses and fierce competition that squeezed profit margins and intensified pressure to improve efficiency.
Although geopolitical tensions in the Middle East, which emerged towards the end of February, had only a limited impact during the quarter, Kenya’s economy continued to contend with mounting public debt and an expanding fiscal deficit.
Analysts attribute the stronger fuel demand to moderating inflation, a relatively stable Kenya shilling against the US dollar and lower borrowing costs, all of which supported consumer spending, business operations and more predictable fuel import prices.
Inflation averaged 4.4 per cent during the quarter before climbing to 6.7 per cent in May and easing slightly to 6.4 per cent in June. Meanwhile, the Central Bank of Kenya maintained an accommodative monetary policy, reducing the benchmark lending rate to 8.75 per cent to stimulate credit uptake among businesses and households.
Diesel remained the largest contributor to growth, with consumption increasing by 9.9 per cent. The rise was fuelled by higher activity in transport, construction, agriculture and industrial operations, all of which rely heavily on diesel-powered equipment and vehicles.
Petrol consumption expanded by 9 per cent, signalling stronger private vehicle use and improving retail demand. Kerosene consumption also increased by 11 per cent, largely due to continued household use.
In contrast, jet fuel demand fell by 9.5 per cent, while fuel oil consumption declined by 10.6 per cent, indicating weaker activity in the aviation industry and heavy manufacturing.
The report also points to Kenya’s accelerating transition towards cleaner energy sources. Liquefied Petroleum Gas (LPG) recorded one of the strongest growth rates in the sector, with consumption rising 17.7 per cent to 123,974 metric tonnes.
PIEA attributes the increase to government interventions, including the zero-rating of LPG and implementation of the National LPG Growth Strategy, both aimed at encouraging households to shift from biomass and kerosene to cleaner cooking fuels.
Retail fuel stations continued to account for the largest share of domestic petroleum sales at 53.1 per cent, highlighting their central role in the market. Resellers contributed 16.5 per cent of total consumption, followed by the civil aviation sector at 13.8 per cent. Demand from commercial enterprises and the transport sector also remained robust, while manufacturing, agriculture and construction accounted for comparatively smaller shares.
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Despite the overall increase in fuel consumption, competition among oil marketing companies intensified as firms expanded retail networks, strengthened supply chains and sought to deepen customer relationships.
Vivo Energy maintained its position as the country’s largest oil marketer with a 19.14 per cent share of domestic petroleum sales. Rubis Energy followed with 14.72 per cent, while TotalEnergies held a 14.25 per cent market share.
Industry players are also calling on the National Treasury and the Kenya Revenue Authority (KRA) to settle outstanding VAT and duty refunds arising from fuel supplied to privileged institutions such as the United Nations and the Kenya Defence Forces. They are further seeking payment of pending subsidies and advance sales, while urging authorities to intensify efforts against the illegal refilling of LPG cylinders, which they say continues to undermine the sector.
