"This is not the end of fuel price increases at Polish petrol stations. Fuel prices expressed in PLN in the European market have been rising and unleaded petrol reaches the same levels to when a barrel of oil cost 100 USD," writes Marcin Lipka, Conotoxia Senior Analyst.
Unfortunately, the market continues to receive negative information for drivers. Brent is trading close to 80 USD per barrel and has reached its highest levels since November 2014 this week. Geopolitical developments in the Middle East have caused concern about maintaining energy supply in the coming months.
Venezuela is important for Polish drivers
In addition, the situation in the fuel market is complicated by Venezuela's immense economic and humanitarian crisis. Although the country has huge oil reserves, the authorities in Caracas have serious problems with extracting oil and preparing it for sale to their global customers.
According to the International Energy Agency (IEA) report from May, oil production from Venezuela fell by another 50,000 barrels per day (bpd) in April, to 1.42 million bpd, the lowest since the 1950s. Since October 2016, oil production from this country has even collapsed and decreased by 650,000 bps (by over 30%).
On Sunday 20th, presidential elections are to be held in Venezuela, and Nicolas Maduro, the current President, will win. The IEA estimates that oil production from this country may decrease by another several hundred thousand bps due to the risk of sanctions introduced by the US or resignation of oil sector employees. All these events distort the balance of oil supply and demand, reduce stocks and increase the risk of further price increases in the coming weeks.
Petrol prices like when crude oil cost 100 USD
In the European ARA market (Amsterdam-Rotterdam-Antwerp), diesel and unleaded petrol prices have been reaching new highs every day. Diesel oil is quoted at 2.14 PLN per litre and unleaded petrol is sold at 2.13 PLN per litre. In both cases, it is 0.08 PLN more than in the middle of last week and the most expensive since October 2014.
It is also worth noting that the price of petrol has already approached the value when oil cost more than 100 USD per barrel. In the period of October 2013 - March 2014, the average price of the popular “95” amounted to 2.19 PLN/litre, which is only 0.06 PLN more than now. During this time, Brent crude was moving above 100 dollars per barrel. So why is fuel so expensive?
First of all, it is the result of the much more expensive dollar. In the analyzed period it cost 3.06 PLN on average. The current exchange rate is above the 3.60 PLN limit, which is 18-19% more. Sometimes there is also too much supply of some fuels compared to demand. Therefore, in certain periods, petrol or diesel is slightly cheaper than oil prices would suggest.
How much will we pay in the coming weeks? Possibly 5.30 PLN/litre
According to the European Commission data from May 14th, the average price of unleaded petrol “95” in Poland was 5.06 PLN per litre and diesel 4.99 PLN per litre. Taking the situation in the European fuel market and the relationship between the wholesale and retail prices into account, it can be expected that the popular "95" will cost between 5.15 and 5.20 PLN per litre on average at the end of May. This also means that at some petrol stations we will see levels close to 5.30 PLN/litre. Diesel car owners, on the other hand, have to prepare for prices oscillating around 5.10 PLN/litre, or about 0.10 PLN more than current prices.