Kenya has bought nearly 400,000 tonnes of oil products for February and March, slightly more than previous volumes, as demand for fuel rises in East Africa due to a growing economy and a shortfall in refining capacity, industry sources said.

Kenya’s Ministry of Energy imports oil products on behalf of other East African nations. The country’s economy is dependent on diesel for transport, power production and agriculture, and many homes use kerosene to generate power.

The country has bought about 37,000 tonnes, or 23%, more oil products a month, compared with previous spot tenders, the sources said.

Kenya’s Ministry of Energy bought 100,658 tonnes of gasoline, 108,846 tonnes jet fuel and 188,627 tonnes of gasoil from Addax Kenya, Galana Oil Kenya, Gulf Energy and Gulf Africa Petroleum Corp (Gapco), they said.

It bought two gasoline cargoes of 50,329 tonnes each from Galana Oil for delivery over February 22-24 and March 10-12 at premiums of $37.37 and $38.16 a tonne over Mediterranean quotes respectively.

It also bought two jet fuel cargoes of 48,846 tonnes and 60,000 tonnes for delivery over February 20-22 and March 6-8 from Addax Kenya and Galana Oil at premiums of $21.93 and $18.36 a tonne over Middle East quotes respectively.

For 500 ppm sulphur gasoil, Kenya bought three cargoes in total. Two were about 80,000 tonnes each for delivery into Kipevu Oil Terminal over February 25-27 and March 19-21 from Gulf Energy and Gapco at premiums of $27.54 and $27.60 a tonne over Middle East quotes respectively.

A third gasoil cargo of 27,969 tonnes for delivery into Shimanzi Oil Terminal in February 18 was sold by Gulf Energy at a premium of $43.98 a tonne over Middle East quotes.

Kenya last bought 485,818 tonnes of oil products in total in the spot market for delivery in December to February.

Meanwhile oil prices are set to stay around the $100 a barrel mark and are unlikely to spike much higher for long even if Iranian oil supply is disrupted, the head of energy trading house Mercuria said recently.

Marco Dunand, chairman of Mercuria Energy Group, told Reuters the oil market had steadied despite turbulence in the Middle East and North Africa over the last year and tension between Iran and the West over Tehran’s nuclear programme.

“Despite the fact that we are encountering very uncertain times - Iran, the Middle East, North Africa and the tsunami - the volatility has reduced and is now lower than in 2008-09,” Dunand said.

“There is a risk to the upside regarding a potential conflict in the Middle East, especially in Iran, but many people think that such a conflict will not necessarily last very long and we will eventually find equilibrium, if you look a few years down the road.

“The market is taking a view that although we have short-term issues, over time the market equilibrium should be somewhere around $100 a barrel. The Saudi statement about $100 a barrel becomes somewhat of an anchor,” he said.

Ali al-Naimi, oil minister of Saudi Arabia, the world’s top oil exporter, said last month that $100 a barrel was an ideal price.

Prices have been supported in recent weeks by worries oil supplies from the Mideast Gulf could be disrupted as the United States and European Union have tightened sanctions on Iran.

The EU plans to ban Iranian oil imports from July and Tehran has threatened to retaliate by banning its oil sales to Europe before the EU embargo comes into force.

Dunand said European refiners were already preparing for a partial loss of Iranian crude and were looking for alternatives: “The market is slowly preparing for the scenario of a partial loss of Iranian crude. Part of the solution will come from the Saudis and part from other places. If Iran were to impose an embargo on Europe, all this will do is to speed the process up by a few months.

“At the moment, European refineries are more likely to try to look for long-term commitments from the Saudis or other sources. I don’t see the opportunity for traders to gain market share, which is mostly in the Mediterranean market,” he said. He said Mercuria had no plans to trade Iranian oil.

Headquartered in Geneva, Switzerland, Mercuria is one of the top five energy traders with a turnover of around $75 billion, moving almost 120 million tonnes of oil, coal and gas a year.‑