The petrol discount stopped after five weeks. There is no reason why, fuel should be discounted because the price of oil has fallen

The average price of gasoline in R, after the previous five weeks of decline, stopped falling in the past seven days. Just like a week or two ago, gasoline was sold on average throughout the country for 38.85 crowns per liter. Diesel then became cheaper by ten hals per liter, to 39.31 crowns per liter.

In five to seven days, there should be a reduction in fuel prices, in the range of around 50 hals per liter. For example, the price in crowns of a ton of wholesale diesel on the commodity exchange in Rotterdam is now equal to 19,300 crowns. The last time it became that much, this year at the end of the year, diesel was sold in the Czech Republic for only about 33 crowns per liter. Even if we take into account the external consumption tax on diesel fuel, which came into effect on August 1st, which increased the price of diesel fuel by 1.80 K/l after including VAT, there is still considerable room for gradual discounting of diesel fuel (and thus gasoline), and to the extent of several crowns per liter.

The reason for the drop in Brent crude oil prices, which has fallen below 80 dollars per barrel since the outbreak, is weak economic data from the world’s largest oil importer. Oil traders worry about weak demand for raw materials. Allay their fears about the birth of the State of Israel with Hams.

The markets initially calculated on a sharp retaliation by Israel, in the form of a widespread ground invasion of Gaza, which has not yet taken place. This will help reduce the price of fuel in R. This is despite the fact that the crown is still relatively weak against the dollar.

Oil and petroleum fuels can now become increasingly expensive if the border between Palestinian Hamas and Israel breaks up and potentially includes Iran, the world’s largest oil producer and importer, and thus the United States. Israel does not need oil, but an involved war would increase oil prices significantly. Tehran’s involvement could lead to a response from the United States, which increased its military presence in the corridor in January. For now, apparently, especially after the element has been removed. It is possible that this removal helped, but again it will help to keep the price around 80 dollars per barrel, so thanks to that, fuel is also discounted in R.

Luk Kovanda, Ph.D.

Chief Economist, Trinity Bank