Sharp fall in crude oil boosts hopes for lower pump prices
Head Duties Fuel For And Forecourts At That Out Of The Ireland's Boland The Around Aa Price Pay Is Munications Taxes Half Picture For Points Consumers Of Blake Stock
Crude oil prices have fallen sharply in recent weeks despite the Israeli-Hamas war of the past month, which may hasten fall in Irish fuel costs and energy inflation.
However, motorists may not see a corresponding drop in oil prices at the pumps for some time, according to AA Ireland, whose head of communications Blake Boland said:
Around half of the price consumers pay for fuel at the forecourts is for taxes and duties, he said. Other factors also influence the price of fuel, including the transportation of refined fuel as the Israel-Hamas and Russia-Ukraine wars continue to put pressure on markets.
Mr Boland said the fall in crude oil “definitely will impact” prices even as other factors bear on the market.
The price of a litre of petrol at the pump fell in October to €1.83 from €1.85 in September, while diesel prices fell slightly to €1.84 a litre.
There will nonetheless be expectations that retail petrol prices will fall further should the surprise drop in crude oil prices be sustained in the coming weeks.
The price of Brent crude, which slid by $2 to $83.20 a barrel on Tuesday, has now fallen from as high as $97.55 a barrel in late September and from $92.30 last month at the outbreak of Israel-Hamas war.
That could signal lower forecourt prices and help ease inflation further.
The price of European wholesale gas rose by 3% in the latest trading session, but was also sharply lower than a month ago at the start of the Middle East crisis.
Gas for delivery in December was trading at €46.50 per megawatt hour, compared with €56.30 last month. Gas is used to power a large quantity of electricity across Europe.
Meanwhile, trade data from China, the world’s largest crude importer, showed a precarious economic recovery as overseas shipments missed expectations, dropping 6.4%, while imports increased by 3% from a year earlier last month.
City Index senior financial markets analyst Fiona Cincotta said:
On the supply side, Russia is shipping crude near the highest rates in more than four months. Continued supply cuts from the Opec+ leaders Saudi Arabia and Russia had supported crude oil prices earlier this week.
The two nations said over the weekend that they would continue their curbs into the end of the year. Opec secretary general Haitham Al-Ghais expects oil demand to remain strong despite challenges facing the global economy.
Separately, Russia’s budget deficit, aided by an increase in oil and gas revenue, shrank for the third straight month despite rising expenditures due to the Kremlin’s war in Ukraine. The fiscal gap narrowed to 1.2 trillion rubles (€12bn), or just 0.7% of Russia’s GDP, at the end of October, finance ministry data showed. A rise in oil and gas revenue allowed Russia to cope better than forecast under the budget law, which targeted the deficit at 2% of GDP.
- Additional reporting Bloomberg