Fuel prices dropped by 30 percent on Monday after an OPEN meeting to cut production failed to reach an agreement.

"It is very difficult to say today where the world market price could end up. Emotions flared when the markets opened, while of the initial 30 percent drop, 20 percent is left by now," said Alan Vaht, member of the board of Alexela.

On Monday morning, a liter of gasoline 95 cost the same as it did on Friday at €1.299 in Estonian gas stations, even though the world market price of fuel was the lowest it has been since 2016. Back then, a liter of motor fuel cost under €1 in Estonia. Alan Vaht said that no such price drop would follow this time.

"The current world market price could translate into prices of around €1.20 at Estonian gas stations," Vaht said on Monday afternoon.

Vaht said that people should keep in mind that Estonia has hiked the excise duties on motor fuel since 2016 and now complies with the biofuel requirement.

"Excise hikes have added 17 and 12 cents to the price of gasoline and diesel respectively (VAT included), while the effect of biofuel is five cents per liter for gasoline and six cents for diesel. The summary effect of the excise hike and biofuel requirement is therefore 22 cents per liter for gasoline and 18 cents per liter for diesel fuel. Even if world market oil price comes down to the 2016 level, we will not see prices lower than €1 per liter in Estonia," Vaht said.

Head of fuel pricing for Circle K Indrek Sassi told ERR that the company's gas stations last lowered prices on Friday.

"Circle K lowered retail prices by 3.5 cents in the morning and a further 4.5 cents in the afternoon to €1.299 for gasoline 95 and €1.279 for diesel on March 6, responding to the world market price drop," he said.

Sassi said it needs to be kept in mind that gas stations have stockpiles that will not be sold for less than what was paid for them.

"A sharp decline in the price of oil no doubt comes as welcome news to the consumer. Because fuel is usually bought at an average price for a certain period of time, a single day's change is too short a time in which to forecast price fluctuations, while service station stockpiles need to be kept in mind," Sassi said.

He added, however, that Circle K will continue to lower retail prices once the world market price of oil and oil products reflects in buying in prices.

"It is also important to note that state taxes are responsible for up to 60 percent of the price of a liter of fuel, meaning that the remaining 40 percent needs to cover cost price, supply and logistics expenses, service station expenses, client discounts and operating profit," Sassi explained.

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