When US and Israeli forces struck Iran on 28 February 2026, the conflict's most immediate economic victims were far from the battlefield. Kenya, East Africa's largest economy and a net importer of oil, fertiliser, and manufactured goods routed through Gulf shipping lanes, began absorbing the shock within weeks. Two months on, the government is seeking emergency foreign loans, a rate-cutting cycle has been frozen, and four people have been killed in fuel-price protests on the streets of Nairobi.
The arithmetic of Kenya's vulnerability is direct. The country consumes about 100,000 barrels of fuel daily and relies entirely on imports. The conflict has caused Iran to largely close the Strait of Hormuz, the waterway that in peacetime carries roughly a fifth of global oil supply, according to The Brief and Deutsche Welle. The result has been a rapid rise in landed fuel costs, passed on to consumers in two consecutive double-digit price adjustments.
Petrol in Nairobi rose to KSh 206.70 per litre and diesel to KSh 206.84 following April's price review, according to Serrari Group. A further 23.5% increase in May, coming after a 24.2% rise the previous month, proved a breaking point for many Kenyans. Deutsche Welle reported that protests erupted across the country in May 2026, killing at least four people and injuring more than 30. The unrest coincided with a public transport strike. The government allocated $38.5 million to help consumers cope with rising diesel and kerosene prices, according to Deutsche Welle, but the measure did not prevent the violence.
The Central Bank of Kenya (CBK) had been cutting its benchmark rate for more than a year, making 10 consecutive reductions totalling 425 basis points. On 8 April 2026, it paused that cycle, holding the rate at 8.75%, citing the need to assess the inflationary impact of higher oil prices, according to Reuters and Serrari Group. The CBK projects that inflation could peak at 6.2% in July 2026 if the conflict persists for three months.
Currency pressure has added to the strain. The Kenya shilling slipped to the 130 level against the dollar in early April 2026, a level last seen in August 2024, before recovering to around Sh129.27, Business Daily Africa reported. Kenya's current account deficit forecast has widened to 3.0% of gross domestic product from 2.2%, reflecting higher oil import costs, according to Serrari Group.
Against this backdrop, CBK governor Kamau Thugge formally requested what he described as "significant" rapid financial support from the World Bank. Reuters reported that Thugge described the request as additional to a pre-existing budgetary support loan that had been under discussion before the crisis began. The specific amount sought is $300 million, equivalent to approximately Sh38.8 billion, according to Business Daily Africa. The final size and terms of any disbursement have not been confirmed.
Thugge said Kenya's hard-currency reserves exceed $13 billion, sufficient to cover 5.8 months of imports, according to Reuters. That buffer provides some protection against short-term shocks. The CBK is also examining the possibility of adding gold to its foreign reserves, looking at domestic gold acquisition strategies used by other nations, Reuters reported.
The damage reaches beyond fuel. Fertiliser costs have nearly doubled in the weeks since the war began, threatening food production and adding to inflationary pressure, Business Daily Africa reported. Shipping disruptions have left millions of kilogrammes of Kenyan tea stuck in Mombasa warehouses, placing export earnings and farmer incomes at risk.
Growth forecasts have been cut by every major institution monitoring Kenya's economy. The International Monetary Fund (IMF) reduced its 2026 projection to 4.5% from 4.9%. The World Bank cut its forecast to 4.4% from 4.9%. The CBK revised its own estimate to 5.3% from 5.5%, according to Serrari Group. Finance Minister John Mbadi put the government's own figure somewhat higher: in presenting the 2026/27 budget, he said growth is expected at 5%, down from an earlier projection of 5.3%, reflecting what he described as the adverse impact of the Middle East conflict on domestic economic activities, Reuters reported. The African Development Bank (AfDB) cut its East Africa regional growth forecast for 2026 by half a percentage point due to the conflict's impact.
The 2026/27 budget is now explicitly framed around managing geopolitical risk. Kenya had only recently stabilised its currency after a prolonged depreciation episode and had been on course to reduce its fiscal deficit. That consolidation is under direct pressure, with the government facing higher import costs, weaker revenues, and the political demands of a population that has shown it will act over fuel prices. Elections are due in 2027, and the cost of living has become a sharper flashpoint with each successive price hike.
How long the disruption to the Strait of Hormuz persists will determine much of what follows. The CBK's projections rest on a three-month conflict scenario. Whether the disruption extends beyond that, and at what severity, remains unknown. So does the full scale of any World Bank disbursement. For now, Nairobi is managing a crisis whose duration and depth it cannot control, and whose costs it is only beginning to tally.
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