How Kenya Is Harvesting a Windfall From the Ruins of the US-Israeli War on Iran

When the United States and Israel launched Operation Epic Fury against Iran on 28 February 2026, killing Supreme Leader Ali Khamenei and triggering the most severe disruption to global maritime trade since the Second World War, nobody in Nairobi was thinking about Lamu. Kenya’s policymakers were, like everyone else, braced for the shocks: surging fuel costs, crumbling trade routes, a currency under pressure.

What nobody anticipated was that a port on a UNESCO-listed island paradise, 340 kilometres north of Mombasa, would emerge as one of the more improbable commercial beneficiaries of the worst geopolitical crisis of the decade.

In the three weeks since Operation Epic Fury began, the Strait of Hormuz has effectively been closed to Western-linked shipping. Iran declared the waterway off-limits within days of the strikes, and the IRGC backed the threat with action.

Since 1 March, at least 16 vessels have been struck in or near the strait. Tanker traffic has fallen by roughly 90 per cent compared to pre-war volumes, according to Lloyd’s List Intelligence, which described conditions in the region as representing “maximum disruption.”

The four titans of container shipping, Maersk, MSC, Hapag-Lloyd and CMA CGM, all suspended passages through the strait simultaneously. Jebel Ali, Dubai’s giant container port and the ninth busiest in the world, was struck by Iranian missiles on 1 March and temporarily closed.

The Red Sea, already partly strangled by Houthi attacks since the Gaza war, became wholly impassable.

Vessels that had nowhere safer to go turned south. They turned towards Kenya.

The White Elephant That Wasn’t

Lamu Port was announced in 2012 as the anchor of the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor, a $23 billion regional infrastructure plan designed to link Kenya’s northern coast to landlocked Ethiopia and South Sudan via a network of roads, rail, pipelines and airports.

Critics were brutal.

The port struggled to attract commercial traffic after opening three of its planned 32 berths in 2021, and operated at roughly five per cent capacity. It received just two container ships in the entire first quarter of last year. For over a decade, it was the favourite exhibit for those who argued that Kenyan public infrastructure spending was, at best, optimistic.

The Iran war has rewritten that narrative in a matter of days. By 11 March, the Kenya Ports Authority reported that Lamu had already received 43 vessels in the year to date. By 19 March, that figure had jumped to 74, representing roughly a third of all ships the port had serviced since it opened. KPA Managing Director Captain William Ruto confirmed that revenues already run into “hundreds of millions of shillings” from the current surge alone.

“We are overwhelmed. The conflicts come with both blessings and challenges in business.” — Captain William Ruto, KPA Managing Director

The physics driving the diversion are straightforward. Lamu is one of East Africa’s closest deep-water gateways to the Middle East, lying roughly 3,300 to 3,600 kilometres from Dubai. Its 17.5-metre draught is deeper than Mombasa’s 15-metre berths, allowing it to accommodate the ultra-large vessels that the crisis is sending southward.

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Its 400-metre quay lengths can berth ships capable of carrying up to 12,000 twenty-foot equivalent units, compared with Mombasa’s capacity of 10,000 TEUs. With Jebel Ali under Iranian missile threat and war-risk insurance premiums on vessels entering the strait running at multiples of their pre-war levels, Lamu’s infrastructure advantages have translated into commercial reality at a speed no government promotional campaign could have achieved.

Porsches in a Paradise

The arrival that captured global attention came on the second Tuesday of March, when the MV Grande Auckland, a 9,000-capacity pure car carrier operated by Italy’s Grimaldi Lines, made its maiden call at Lamu’s Kililana terminal.

It had left Europe with a full load of high-end vehicles bound for Jebel Ali. Instead, it discharged 469 of those cars at Lamu, including gleaming Porsches that were photographed inside a port warehouse in images that circulated internationally, before continuing to Mumbai with the remainder.

Days later, the MV Grande Florida Palermo arrived from Yokohama laden with 3,800 motor vehicles originally destined for the same Gulf port.

Another vessel with 5,000 cars is expected imminently.

The total vehicles already offloaded at Lamu exceed 4,000 units, all effectively stranded there until the security situation in the Gulf improves sufficiently for onward movement.

Munir Minas Hussein, Chartering and Business Development Manager for Africa at Nisomar Group, the official East African agent for Grimaldi Shipping Line, was candid about the calculation that brought his vessels south. “As an agency, we managed to convince the vehicle owners to divert and bring the vessel to Lamu Port, which has substantial economic advantages compared to other countries and ports within the Indian Ocean,” he said.

The port charges ten dollars per car for storage after a free ten-day period, a figure that will generate modest but real revenue as thousands of high-end vehicles sit waiting for the Gulf to reopen.

Shipping lines that have made maiden calls at the facility have already signalled interest in returning on a long-term basis. What years of government promotion could not achieve, the deaths of thousands of kilometres away, apparently has. Lamu Port General Manager Abdulaziz Mzee was measured in his response to the windfall.

“There are still ships with cargo that are destined for the Gulf, but since the situation there has deteriorated, those ships are more or less just wandering or drifting at sea,” he told local media. “It is not something to celebrate, but at the same time it is a commercial blessing.”

Mombasa: Feast and Famine on the Same Quay

Mombasa Port, Kenya’s dominant maritime gateway and the principal entry point for landlocked Uganda, Rwanda, Burundi, South Sudan and the eastern Democratic Republic of Congo, is experiencing the crisis as both opportunity and ordeal simultaneously.

The Shippers Council of Eastern Africa has confirmed that one shipping line alone increased its vessel calls to Mombasa from eight to twenty following disruptions at regional transshipment hubs.

Vessels that would ordinarily call at Jebel Ali or transit through the Suez Canal are being redirected around the Cape of Good Hope, adding ten to fourteen days to transit times and over one million dollars in additional costs per journey.

That longer routing is delivering more ships to Kenyan shores than normal schedules would ever produce.

The other side of the ledger is less cheerful. KPA’s Captain Ruto acknowledged that the surge in vessels is straining handling capacity. “We are overwhelmed,” he said. The longer voyages around southern Africa reduce the frequency and volume of inbound shipments of manufactured goods, electronics, grain and edible oils. The goods arriving are fewer, later and far more expensive. Importers will eventually pass those costs on. The irony of Kenya’s coastal ports is that they may simultaneously bustle with diverted vessels and feed imported inflation into the inland economy.

The Bunkering Bonanza

Beyond cargo handling, the maritime crisis is generating revenue in a form that rarely makes headlines but is proving highly lucrative along Kenya’s coast: bunkering.

Ships rerouting around the Cape of Good Hope travel thousands of additional nautical miles, exhausting fuel reserves and requiring reprovisioning at Indian Ocean ports. Mombasa and Lamu are among the closest viable stops.

The Shippers Council of Eastern Africa has identified the surge in demand for vessel provisioning, spares, stores and refuelling as creating “a ripple effect of job creation and economic stimulation in the coastal regions” that extends well beyond the port gates themselves.

The closure of both the Strait of Hormuz and the Red Sea has effectively redirected the arterial flows of global commerce through the Indian Ocean and around Africa’s southern cape, and Kenya sits squarely athwart that rerouted corridor.

Freight rates from Shanghai to Jebel Ali more than doubled within days of the initial strikes.

CMA CGM applied a $3,000 emergency surcharge per container on Gulf-bound cargo. Shipping charter rates quadrupled. Each of those cost increases generates revenue at some point along the new route, and Kenya’s ports are positioned to capture a share.

The Fuel Bill That Cancels the Party

The same war producing revenue at the port is extracting a steep price at the fuel pump, and the arithmetic is unambiguous. Kenya imports virtually all of its refined petroleum products, the great majority of them historically sourced from the United Arab Emirates and the broader Gulf region.

Murban crude oil, the principal grade Kenya imports, had been trading at approximately $76 per barrel in early March.

By 17 March, Cash Dubai crude hit a record $157.66 per barrel. The Middle Eastern blends that Kenya depends on have, in the assessment of geopolitical economist Aly-Khan Satchu, “effectively doubled” in price. “The biggest expense item for Kenya is the monthly fuel bill, and that has effectively doubled,” Satchu told local media. “The government of Kenya will have to be dynamic and innovative.”

The exposure is structural. More than 75 per cent of refined petroleum imports into Eastern and Southern Africa originate in the Middle East, according to energy consultancy CITAC, making the region disproportionately exposed to exactly this kind of shock.

Iranian drone strikes on the UAE’s major bunkering hub and crude export terminal in mid-March compounded the supply disruption. Kenya’s government controls retail fuel prices and will eventually have to pass the higher import cost to consumers in what analysts describe as a regressive increase that will hurt lower-income households most severely.

Annual inflation had been running at 4.3 per cent in February; economists warn that if disruptions persist, the energy shock alone will add significant upward pressure.

Kenya and other African importers are now exploring emergency alternatives. According to multiple sources, Dangote Petroleum Refinery in Nigeria has received enquiries from Kenya and Ghana about sourcing refined products.

The refinery, which operates at 650,000 barrels per day with roughly 25 per cent of capacity available for export, has emerged as a potential lifeline for countries cut off from Gulf supply chains. “Availability is currently more important than price,” Dangote told The Economist.

For Kenyan oil marketing companies, that sentiment captures the entire dilemma: the war has separated supply from price logic, and Kenya must navigate both simultaneously.

Exporters Counting the Losses

Kenya’s exporters are not sharing in the bonanza. The country’s meat industry, which relies on the Middle East for the overwhelming share of its foreign sales, has seen shipments collapse to under five per cent of usual levels since the war began, according to Geeska.

The UAE historically takes the largest share of Kenyan meat exports, particularly during the high-demand Ramadan period.

The combination of suspended Middle East flights, closed airspace across Bahrain, Iraq, Kuwait, Qatar, Syria and the UAE, and sky-high cargo insurance premiums has made air freight prohibitively expensive.

Prices per kilogram for perishable exports have more than doubled. Slaughterhouses are struggling with excess stock. Some processing facilities have cut casual labour by as much as 80 per cent.

If the disruption extends beyond Ramadan, industry players warn of structural damage to a sector that was previously registering strong growth.

Tea, coffee, avocados and horticultural produce face less immediate disruption given their routing through European markets, but longer voyage times and elevated freight costs are beginning to feed through. Exporters warn that extended delivery timelines threaten product quality for time-sensitive goods.

Renewable energy expert Juliana Kainga framed the currency dimension bluntly: “We might see an ease in our exports in terms of the people who import our goods, which means there is a lot less that is coming into our country in terms of dollars, and we need a lot more to pay out for the oil. So this puts a lot of pressure on the shilling.”

LAPSSET’s Moment, and Its Limits

The war has done more to advance the strategic case for the LAPSSET corridor than fifteen years of diplomatic promotion managed.

The argument that Lamu could serve as a regional maritime hub, providing landlocked Ethiopia and South Sudan with an alternative to Djibouti and a safer entry point for Indian Ocean trade, has been validated in weeks by commercial reality.

Shipping lines that previously had no interest in Lamu are now calling, some for the first time. Minas of Nisomar Group said what the port’s advocates had long argued but struggled to demonstrate: “Once the hinterland infrastructure of East Africa is well built and lit, we will be able to discharge more vehicle cargo and other goods destined for Kenya and neighbouring countries like Ethiopia and South Sudan.”

The corridor’s incomplete infrastructure remains the binding constraint.

The highways connecting Lamu to South Sudan and Ethiopia are unfinished. Without those road links, diverted cargo can be stored at Lamu but not efficiently distributed into the hinterland markets that justify the port’s full commercial logic. The LAPSSET corridor’s full 32 berths remain unbuilt, with only three operational. The war has delivered commercial validation at scale; it has not delivered the infrastructure needed to absorb it.

The Reckoning

Kenya’s relationship with the US-Israel-Iran war is, ultimately, a study in simultaneous gain and loss. The country is harvesting real revenue from Lamu, real bunkering income along its coast and real commercial visibility for infrastructure that had struggled to attract attention. It is absorbing a fuel bill that has effectively doubled, pressure on the shilling, collapsing export earnings in its most Middle East-dependent sectors and the certainty of consumer price increases that will eventually arrive at the pump. Prime Cabinet Secretary Musalia Mudavadi, addressing an audience at Chatham House in London, called on African nations to use the crisis as a warning to “reassess their global role and strengthen their economic independence.”

The net position is deeply uncertain. Kenya is a net importer of oil products. Every barrel that costs more erodes purchasing power, raises production costs and amplifies the pressure on an economy that was already navigating fiscal tightening.

The shipping revenue and bunkering gains are real but bounded. The fuel cost increase is real and systemic. Whether the former outweighs the latter depends on how long the war lasts, how quickly Iran’s pressure on the Hormuz can be degraded, and whether the commercial relationships forged in crisis survive into calmer conditions.

What the war has already settled is the question nobody was seriously asking before 28 February: whether Lamu Port was worth building. Scores of Porsches, parked in an Indian Ocean warehouse on a UNESCO World Heritage island, have answered that definitively.

The question Kenya now faces is whether it can extract lasting commercial advantage from a tragedy it did not cause, cannot control, and cannot fully afford.