Fuel may rise in price by 5 hryvnia: what is the reason
25 February 12:44
Ukrainian drivers may soon face a new rise in fuel prices. Against the backdrop of escalating tensions between the US and Iran, nervousness is growing on global oil markets, and in Ukraine, there are increasing predictions that gasoline and diesel prices will rise by at least 5 hryvnia per liter.
Why prices may rise
Prices for gasoline and diesel fuel at Ukrainian gas stations may rise by another 5 hryvnia per liter within a month if the US launches a military operation against Iran. This was stated by the founder of the Prime group of companies, fuel expert Dmytro Leushkin, in a comment to Unian.
According to him, the dynamics of price growth at gas stations will directly depend on the duration and scale of possible military actions.
“If the actions are as swift as in Venezuela and the operation lasts up to two weeks, oil will rise only in the first day or two, reaching $80 per barrel, and then prices will reverse when it becomes clear that this is a short operation. In this case, it will have almost no impact on our market, as we work on long-term contracts. Prices may rise by 1-2 hryvnia,” the expert noted.
If the US operation drags on, the cost of “black gold,” according to the expert, could exceed $85 or even $90 per barrel.
Loushkin added that price dynamics will depend on Iran’s ability to block the Strait of Hormuz, through which up to 20% of the world’s “black gold” is supplied, and on damage to oil production facilities.
If there is no military operation but the tense situation in the Middle East continues, the expert predicts that the cost of gasoline and diesel will increase by 1 hryvnia within a week due to rising oil prices.
He adds that fuel prices may not stop there. In mid-late March, they may rise by another hryvnia due to the devaluation of the Ukrainian currency, as well as increased fuel logistics costs due to the terrible condition of Ukrainian roads.
“So, we are currently seeing a potential increase of one hryvnia, and then another hryvnia. This is without taking into account the Iran factor,” concluded Lyoushkin.
The market is preparing for price increases at gas stations
Energy expert Gennady Ryabtsev commented
“We are currently seeing a trend where the information field is being prepared to justify the intentions of companies in the premium segment of the oil products market to raise prices by exactly this amount. Although in reality, the price increase that is taking place is speculative and temporary.”
According to the expert, even if the situation between the US and Iran does affect the market, the scale of the price increase should be significantly less than the announced 5 hryvnia.
“And if the situation with the US and Iran does lead to price increases, they will be significantly lower than those announced. Most likely, the ground is being prepared for an increase similar to that which occurred in April last year, when premium chains raised prices against the backdrop of escalating tensions between Iran and Israel.”
Ryabtsev recalled that last year, chains set prices based on quotations of $80 per barrel. However, after oil fell to $60, gasoline prices did not return to their previous level.
“That is, right now, in exactly the same way, the ground is being prepared for a price increase. And note that oil is not currently trading at $80 per barrel, but the price increase should be 5 hryvnia relative to the current price. This will be a speculative increase,” he stressed.
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Gasoline and diesel prices in Ukraine have reached an all-time high
At the end of last week, wholesale prices for light petroleum products rose sharply following the external market. Large chains and direct importers quickly responded to this change. Starting on the weekend, prices at OKKO and WOG, and later at UKRNAFTA and UPG, rose by 1 hryvnia per liter, reaching an all-time high.
As for liquefied gas, the changes were isolated and only caught up with the previous growth in wholesale prices, according to the industry publication Enkorr.
The average wholesale price of gasoline rose by 0.50 UAH/liter to 52.50 UAH/liter between February 18 and 20, while diesel fuel rose by 1.37 UAH/liter to 53.32 UAH/liter.
At gas stations, average retail prices for light petroleum products rose by 50 kopecks/liter and reached their highest levels since the beginning of 2022: 61.49 UAH/liter for gasoline and 61.15 UAH/liter for diesel. Liquefied gas remained almost unchanged at 38.52 UAH/liter.
The increase at gas stations partially offset the reduction in the spread on diesel at the end of the week to a level that usually signals the beginning of an increase in retail prices (7.28 UAH/liter). As of February 23, the difference between wholesale and retail prices for diesel was 8.07 UAH/liter (a decrease of 0.67 UAH/liter compared to the previous week).
What drivers can expect
Experts note that if oil prices remain stable, there should be no sharp and prolonged price increases. At the same time, premium chains may be the first to raise prices, after which other operators will gradually follow suit.
Thus, in March, Ukrainians may see a gradual increase in the cost of A-95 gasoline, diesel, and autogas, but the scale of this increase will depend on:
- the situation on the global oil markets;
- the hryvnia exchange rate;
- logistics costs;
- the competitive policy of gas station chains.
For now, the market is waiting to see how things develop on the international stage.
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