How US-Israeli Strikes on Iran Are Hitting Kenya’s Economy

NAIROBI, March 3 — The economic aftershocks of joint military strikes by the United States and Israel on Iran are being felt thousands of kilometres away in Kenya, threatening trade flows, raising fuel costs and unsettling key foreign exchange earners.

The escalation has rattled global energy and shipping markets, with crude oil prices climbing sharply amid fears of supply disruption through the Strait of Hormuz, the narrow channel that carries roughly a fifth of the world’s oil shipments. Any sustained blockage or security threat along that corridor translates directly into higher freight, insurance and energy costs for import-dependent economies such as Kenya.

For Nairobi, the exposure is significant. Kenya imported goods worth more than Sh550 billion from Gulf economies last year, led by refined petroleum products, fertiliser, machinery and electronics. At the same time, exports to the region have nearly doubled in three years, reaching about Sh165 billion, dominated by tea, coffee, meat, flowers and re-exported jet fuel.

A spike in oil prices would feed quickly into pump prices at home. Fuel is a major input cost across transport, agriculture and manufacturing. Diesel powers trucks that move goods inland, generators that support industrial production and irrigation systems in farming belts. Higher fuel prices therefore risk reigniting inflationary pressures just as households grapple with elevated food and borrowing costs.

The government-to-government fuel import arrangement with Gulf suppliers could also face stress. Kenya currently sources cargoes from firms including Saudi Aramco, Emirates National Oil Co and Abu Dhabi National Oil Co under a credit framework designed to ease pressure on foreign exchange reserves. While the agreement cushions the country from spot market volatility, prolonged conflict could push up premiums and freight rates embedded in the supply chain.

Air transport has already taken a hit. Middle Eastern hubs that connect Africa to Europe, Asia and North America have experienced disruptions, forcing rerouting and flight suspensions. Kenya Airways has in recent days reviewed its Gulf schedules as airspace closures complicate operations. The impact extends beyond passenger travel. Kenya’s horticulture industry depends heavily on air freight to ship fresh produce to high-value markets. Delays and higher cargo charges erode margins for exporters already contending with currency fluctuations and compliance costs.

The Gulf also plays an outsized role in Kenya’s aviation fuel re-export business. Carriers such as Emirates and Qatar Airways regularly uplift jet fuel in Nairobi, making refuelling at Jomo Kenyatta International Airport a significant source of foreign exchange. Any reduction in traffic through these hubs threatens that revenue stream.

Trade data underline the scale of exposure. The United Arab Emirates is Kenya’s largest Middle Eastern trading partner, accounting for the bulk of both exports and imports. Saudi Arabia follows closely, particularly in energy supplies. Disruptions in these markets could squeeze Kenyan exporters of tea and meat while raising import bills for fuel and industrial inputs.

President William Ruto has called for de-escalation and diplomatic engagement, warning that wider conflict in the Middle East poses a threat to global stability and economic recovery. For policymakers in Nairobi, the immediate challenge lies in containing inflationary spillovers while safeguarding foreign exchange reserves.

Analysts say the depth of the impact will depend on the duration and scale of the conflict. A brief flare-up may cause temporary volatility in oil and freight markets. A protracted confrontation that draws in additional regional actors would amplify risks to shipping lanes, commodity prices and investor sentiment across emerging markets.

For Kenya’s private sector, the calculus is already shifting. Importers face higher landed costs, exporters must navigate uncertain logistics, and consumers brace for possible increases in fuel and transport charges. In an interconnected global economy, shocks in the Gulf rarely remain regional. For Nairobi, the geopolitical tremors now carry tangible economic consequences.