Crude prices have been rising sharply on the global market following supplies shortfall due to the Libyan conflict and unrest in other Arab states sending oil prices to two-year highs near $120 per barrel.
"While much of the recent rise in the oil price originated from the disturbances in North Africa and Middle East, for a policy maker, it would be imprudent to assume that the higher oil prices would be short-lived," Odinga told Parliament.
"If the price remains at $100 per barrel for the rest of the year, Kenya's oil import bill would be higher by about $700 million or 2 percent of GDP."
Kenya expects economic growth to bounce to 5.7 percent this year from an estimated 5.4 percent in 2010 before accelerating to about 7 percent by 2013.
The shilling hit a record low of 86.70 last week, down 7.2 percent from the end of 2010, mainly on fears that rising global crude prices would increase Kenya's oil import bill.
Fuel prices can have a significant bearing on Kenya's rate of inflation as many of the country's 39 million people rely on kerosene for lighting.
Most of Kenya's food is moved around by road while in times of drought electricity producers turn to diesel generators as water levels drop at hydro power plants.
Kenya's central bank surprised markets on Tuesday by raising its key interest rate by 25 basis points to 6.0 percent, less than two months after cutting it, turning policy around to defend the weak shilling and curb rising inflation.
Odinga said higher oil prices, together with lower international prices of coffee and tea, was estimated to lead to a worsening of the country's terms of trade by 12 percent in 2011.
"This means that Kenya needs to spend $12 more of our export earnings to buy $100 of imported goods," Odinga said.
