- Recent price drops haven’t translated into big pump cuts due to rising costs
- Even with Brent under $100 and three-month aid, 7 lei is unlikely
- Major pressures: higher exchange rates, transport, insurance, refining costs, and loss of state aid
Fuel markets in Romania are experiencing a period of pronounced volatility, influenced by global and regional economic factors. While international oil prices have fallen significantly in recent weeks, experts warn that Romanian drivers should not expect substantial pump price reductions in the medium term.
Recent evolution of fuel prices
The decline in this week’s prices for crude oil (8%) and gasoline (9%) has led to a reduction in pump prices at gas stations across Romania. In Bucharest, there are fueling stations at 8.06 lei per liter for gasoline, meaning the price has fallen by 0.59 lei per liter from the last day of the previous month (June 30, 2022).
This drop in gasoline prices is visible both in Romania and across Europe, with the average reduction around 0.5%. It seems that, in our country, gasoline retailers have implemented sharper pump price cuts compared with the European market.
Global context of the oil market
Brent crude futures have hovered around $104 per barrel, and the week is expected to end with prices lower than the previous week. Internationally, the reference price has fallen by more than 6% to date, following the commodities market trend and influenced by issues signaling a potential recession.
Concerns about stabilizing the global economy are present at the international level. Christopher Waller and James Bullard, Federal Reserve policymakers, have endorsed a 75 basis point rate hike this month to curb inflation.
Factors that caused price increases
Since the start of the year, oil prices have risen by about 35%, driven largely by external factors shaped by the pandemic and, subsequently, the war in Ukraine. Disrupted supply chains, economic sanctions and geopolitical uncertainty have created significant pressures on global energy markets.
In the near term, a new price rise is anticipated due to the suspension of a key export route for Kazakh oil. The decision has already been made and, until an alternative transport method for Kazakh oil is identified, instability will continue.
When will oil prices fall?
IEA (International Energy Agency) expects oil prices to fall below $100 per barrel. In our country, such a decline, combined with the price compensation aid currently in place for the next three months, could bring gasoline prices at the pump to a maximum of 7 lei per liter.
Why we won’t see gasoline at 7 lei per liter
Unfortunately, there are also other factors that influence fuel price evolution. These include:
- Exchange rate: An 11% rise in the latter half of the year directly affects the cost of importing fuels
- Transport costs: Shipping and land transport tariffs remain high
- Insurance: Insurance premiums for transport have risen significantly
- Refining costs: Crude oil processing is becoming more expensive
- Cancellation of administrative measures: State aid will be stopped, removing a major price buffer
Although gasoline price could theoretically drop to 7 lei per liter, when considering all the elements mentioned, the most optimistic scenario is that Romanians will be able to refuel at 8 lei per liter.
Medium-term outlook
Clearly, we must not overlook the fact that this year the operation of the Caspian Pipeline Consortium will also be stopped, and this will reflect in higher crude oil prices. This critical infrastructure transports about 1.5% of global oil production, and its shutdown will create additional tensions in the already fragile energy market.
In conclusion, although recent price declines offer a small respite to Romanian drivers, the combination of economic, geopolitical and structural factors makes a sustainable decrease below the 7 lei per liter threshold unlikely in the near future. Budget management for fuel remains a priority for most drivers in Romania.
sursa foto: stirileprotv.ro
