Despite Cheaper Crude Oil, Fuel Prices Are Rising

A significant increase in fuel prices is expected at domestic gas stations from Saturday: the wholesale price of petrol will increase by 4 forints gross, and diesel by 8 forints gross. This is particularly surprising given that the world market price of crude oil is currently on a downward trend. Experts say that the price increase is due to global refinery problems, and attacks on Russian facilities,  Index reports.

On Friday, a liter of 95 octane petrol still costs 578 forints (1.50 euros / 1 euro=385.39 forints), and diesel can be purchased for 584 forints, but these prices may rise from Saturday if gas stations pass on the wholesale price increase.

The situation is difficult to understand because while the price of crude oil is falling due to oversupply, fuel prices are still rising. The reason for this phenomenon can be found in the crisis in the global refining industry:

although there is sufficient crude oil available, production difficulties mean that fewer finished products are coming onto the market, that is driving up prices.

Attacks on Russian refineries, shutdowns, and maintenance have created a shortage in the fuel market, especially for diesel. In October, Russia exported only 311,000 barrels per day of 10 ppm diesel, the lowest amount since 2016. The situation was further exacerbated by a drone attack on Lukoil’s Volgograd refinery, that is also expected to limit exports from Novorossiysk.

The market is tight due to maintenance and shutdowns at foreign refineries: in the case of diesel, the difference between the price of crude oil and the finished product rose to a 21-month high of over $40 per barrel. In the United States, Midwest ultra-low sulfur diesel stocks fell by 1.4 million barrels, while petrol stocks fell by 4.7 million barrels.

Demand is also rising as winter approaches, especially for heating oil, which is putting further pressure on prices.

However, experts cited by Index emphasized that Hungary’s energy supply remains secure and that the price increase is entirely due to external, global factors. This gives particular significance to Viktor Orbán’s meeting with Donald Trump today, where he is expected to discuss exemption from U.S. sanctions on Russian energy supplies.

Via Index, Featured image: Pexels

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