The escalating war in the Middle East is no longer a distant geopolitical crisis for Kenya. It is fast becoming an economic concern with real implications for fuel prices, export earnings, remittances and the stability of the shilling.
Kenya’s exposure stems from a deep trade imbalance and heavy reliance on Gulf countries for petroleum and industrial inputs. Fresh trade data shows that in 2024, Kenya imported goods worth Sh554.45 billion from the Middle East while exporting only Sh164.65 billion to the same region. Imports are therefore nearly four times higher than exports, creating a structural vulnerability in the event of prolonged conflict.
With total Gulf trade now exceeding Sh700 billion annually, economists warn that further escalation — particularly around key oil transit routes — could transmit inflationary pressure directly into Kenyan households and industries.
A lopsided trade relationship
Kenya’s largest import partner in the region is the United Arab Emirates, which accounted for Sh337.25 billion in imports in 2024. Oman followed at Sh71.3 billion, while Saudi Arabia supplied goods worth Sh52.35 billion. A significant portion of these imports consists of refined petroleum products, petrochemicals and industrial raw materials.
On the export side, the UAE remains Kenya’s biggest Middle Eastern market, absorbing goods worth Sh101.34 billion in 2024. Saudi Arabia purchased Kenyan exports valued at Sh27.2 billion, largely tea, horticulture and meat products.
This imbalance means any disruption in shipping routes, insurance premiums or air transport affects Kenya more severely on the import side than it does on exports. The Kenya National Bureau of Statistics indicates that the country’s merchandise trade deficit widened to Sh1.7 trillion in 2025, up from Sh1.6 trillion in 2024. That widening gap limits the government’s ability to absorb new shocks.
Energy and fuel prices at the centre of risk
The greatest risk lies in the energy sector. Petroleum was Kenya’s single largest import in 2024, costing Sh552.4 billion. Most of this fuel originates from Gulf producers and passes through the Strait of Hormuz, a narrow maritime corridor that handles roughly 20 percent of global oil shipments.
If the conflict disrupts traffic through the strait, global oil prices could surge. Analysts note that a sustained rise in Brent crude to between $80 and $100 per barrel would quickly translate into higher pump prices locally. Kenya’s Government-to-Government fuel import arrangement, designed to stabilise the shilling by easing dollar demand, would come under strain if supply chains tighten.
Higher fuel prices would have a cascading effect. Transport costs would rise, pushing up food prices. Electricity generation costs would increase. Manufacturers dependent on diesel-powered logistics would face elevated expenses. With nearly 70 percent of Kenyan households classified as low-income, even modest increases in pump prices could significantly affect disposable income.
Tea and Agricultural Exports Under Pressure
Kenya’s agricultural sector, particularly tea, also faces exposure. In 2024, Kenya exported approximately 13 million kilogrammes of tea to Iran, valued at Sh4.26 billion. Saudi Arabia and the UAE are even larger buyers, with tea exports worth Sh46.1 billion and Sh70.1 billion respectively.
Any escalation that leads to flight suspensions, airspace restrictions or heightened maritime insurance premiums could disrupt these flows. Perishable exports such as fresh produce are particularly vulnerable because delays erode quality and profitability. Industry estimates suggest that war-risk insurance and rerouting costs can consume up to 30–40 percent of export value for perishable goods.
The situation is compounded by instability in Sudan, which has already led to a 74 percent drop in Kenyan tea exports to that market in early 2024. Annual losses linked to the Sudan crisis alone were projected at about Sh6.5 billion, highlighting how geopolitical instability can rapidly shrink export revenues.
Although Kenya’s total agricultural exports hit a record Sh1.1 trillion in 2024, a prolonged Middle East conflict could chip away at that growth momentum.
Manufacturing and Industrial Input Costs
Kenya’s manufacturing sector depends heavily on imported petrochemical derivatives, plastics and fertilisers from Gulf countries. Ethylene polymers — key inputs in plastic production — are sourced largely from Saudi Arabia and the UAE.
The Red Sea security crisis has already forced some vessels to reroute around the Cape of Good Hope, extending transit times and absorbing global shipping capacity. While the Port of Mombasa recorded a 132.9 percent surge in transshipment traffic in 2024 to 491,666 TEUs as ships avoided conflict-prone ports, the redirection has also created logistical bottlenecks.
Manufacturers report longer container turnaround times and higher freight costs. Rising input prices squeeze profit margins and reduce competitiveness in both domestic and regional markets. If disruptions intensify, the construction industry — reliant on imported steel, plastics and fuel — could also see project costs rise further.
Aviation, tourism and trade connectivity
Middle Eastern hubs such as Dubai, Doha and Abu Dhabi serve as critical transit points for passengers and cargo travelling to and from Kenya. Airspace restrictions or rerouting to avoid conflict zones increase flight durations and fuel consumption.
Higher airline operating costs typically result in elevated ticket prices, which can dampen tourism demand. Kenya’s tourism sector, still consolidating gains after pandemic-era losses, could face headwinds if international travel becomes more expensive or uncertain.
Air freight costs are also likely to rise. For horticultural exporters who depend on timely air shipments, delays or increased charges reduce margins and could shift competitiveness toward other producing nations.
Remittances: A key foreign exchange buffer
Remittances have become Kenya’s largest source of foreign exchange, reaching $5.04 billion (about Sh650 billion) in 2025. Although North America remains the primary source, the Middle East corridor is significant.
By early 2026, remittances from Saudi Arabia had declined by 25% year-on-year, contributing to a broader 14.7 percent drop in inflows from the Asian region. For the first time in recent years, the United Kingdom overtook Saudi Arabia as Kenya’s second-largest remittance source.
Remittances cover nearly 40 percent of Kenya’s trade deficit. A sustained decline in Gulf-based earnings would reduce foreign currency inflows, increasing pressure on the shilling. Currency depreciation would, in turn, make imports — especially fuel — more expensive.
A fragile economic balancing act
Kenya enters this period of uncertainty with public debt exceeding 70 percent of GDP and limited fiscal room to deploy broad subsidies. The widening trade deficit, heavy reliance on Gulf fuel supplies and exposure of key export sectors mean that a prolonged Middle East war could strain macroeconomic stability.
While some sectors, such as port transshipment services, may experience short-term gains from rerouted shipping traffic, the broader balance of risk tilts negative. Higher fuel prices, export disruptions and falling remittances could combine into a triple shock affecting inflation, currency stability and household welfare.
As global tensions persist, Kenya’s economic resilience will depend on diversification of export markets, expansion of renewable energy capacity and strengthening regional trade networks. For now, the war underscores how interconnected supply chains have made distant conflicts an immediate domestic concern — one measured not only in headlines but in fuel receipts, food prices and exchange rate movements.
