Retailers: World oil prices changeable, hard to predict cheaper fuel on way

Fuel pumps in Estonia.
Fuel pumps in Estonia. Source: Merilin Pärli/ERR

While world oil prices fell early on this week, an almost immediate rally Tuesday demonstrates how volatile the market is, fuel sellers say. This makes price falls at filling stations of any kind – leave alone to the lows experienced in 2020 – difficult to forecast, ETV news show 'Aktuaalne kaamera' (AK) reported Tuesday night.

At the time of writing, gasoline (95) costs €1.459 per liter at pump – an all-time high – while diesel, which for much of the second half of 2020 cost just under a euro a liter, following a cut in excise duties, now costs €1.229.

Estonian diesel is even now cheapest in the Baltics, but, conversely, gasoline is costlier in Estonia than in Latvia or Lithuania.

Spokesperson for retailer Neste, Risto Sülluste, told AK the way out of the current high prices is not clear.

He said: "The global market is still very volatile and it is almost impossible to make a long-term forecast."

"The strengthening of the dollar against the euro is retarding a price fall somewhat. For the past two weeks, the retail price of petrol and diesel has been stable, with an average of €1.453 for gas and €1.220 per liter for diesel," Sülluste continued.

Raimo Vahtrik of retailer Circle K agreed, forecasting was hard. "The retail price of motor fuels in Estonia depends on the purchase price of oil, state excise and local competition. As excise duty on car gasoline is the highest in the Baltic States, and higher renewable energy and climate requirements apply in Estonia, then it makes sense that gasoline prices are highest here," Vahtrik told AK.

"In the event of a fall in world market prices, we are also prepared to lower retail prices at service stations," Vahtrik added.

In early 2020, prior to the arrival of the pandemic, world oil prices were very low and even went into negative figures briefly, which accounted also for last year's low gasoline prices. 

The current volatility makes it hard to talk about any price fall at pump yet, though the current downward trend in world oil prices has started to filter through, they said.

"If this trend continues, it may also be reflected in Estonian prices in a week and a half," Alexela spokesperson Tarmo Kärsna said, though Raimo Sülluste at Neste noted that filling stations have a few days' supply, while competition between retailers will also be a factor.

Last Christmas, retailers engaged in a price war, which ended with the festive season.

Raimo Vähtrik said that the current US$70 per barrel figure is likely to remain in place, though prices have fallen – to a three-week low Monday – and risen again already this week, relating to fears about the COVID-19 delta strain spreading in China, followed by OPEC countries response to those fears (China is in the top 10 of crude oil producing countries, by volume - ed.).

Tarmo Kärsna of Alexela told AK that usually, it takes about a week for world price falls to be translated into domestic pump price falls. Seasonal factors affect gasoline and diesel in opposite directions, he added – while private individuals travel more during holidays, pushing up demand and thus price, hauliers are transporting less, which leads to a fall in demand for diesel.

The volatility was displayed nearly a month ago in mid-July, when an OPEC announcement of increased volumes was followed by a 9 percent fall in prices, only for the price of crude oil rose to jump up again by nearly as much, the very next day.

This week's fluctuation – a fall to US$66 on Monday followed by a rise to US$70 on Tuesday is comparable, he said.

Ultimately, much revolves around speculation; three-day average price trends are more helpful in that respect, compared with daily figures, ERR reports.


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Editor: Andrew Whyte

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