Oil association chief: Fuel prices not rising before New Year was 'miracle'
The lag between rising crude oil prices rising in the closing days of 2022 and that being translated to higher prices in Estonia, which did not materialize until Tuesday, was a little Christmas "miracle", Mart Raamat, head of the Estonian Oil Association (Eesti Õliühing), says.
Raamat added that making predictions for 2023 was not something which could be safely done.
Appearing on Vikerraadio show "Vikerhommik" Wednesday morning, Raamat said that Tuesday's fuel price rises in Estonia related to the global price of crude oil.
"In the last two weeks of last year, the price of oil and, as a result, the price of its finished products, increased by almost ten percent," Raamat said.
This reached filling stations in Estonia in the New Year.
"They could have risen earlier, but it was a great Christmas miracle that that was not the case until January 3," he added.
Meanwhile, the EU has barred Russian crude oil imports, starting from December 5 last year, but a ban on refined oil, vehicle fuels etc. will not kick in until February 5.
Europe had, he said, exposed itself to greater risk than it needed to have.
"This is Europe's vulnerability: We are dependent on external oil supplies, while we have pushed our oil refining capacity beyond the limits with various stringent environmental requirements," he said.
In the case of diesel, 10 percent of Europe's consumption comes directly from Russia, or had until now, making a replacement necessary, for instance from China, the UAE or India, but this, too, will impact on the end-price to consumers, Raamat said.
Diesel is the most-consumed fuel in Europe.
As for 2023, Raamat said that it was too early to forecast for the whole year, since analysts are unsure what will happen with crude prices.
For instance, Brent prices fell 4 perecent on Tuesday, but markets have been particularly volatile and have been keepig in mind the weak global economy and the likelihood it may lead to a fall in demand for oil, even with the ending of Covid restrictions in China – which may not have a significant, positive effect on demand in that country, Raamat said.
At the same time, in future demand may outstrip supply, particularly in Europe, he added.
The correlation between Russia's invasion of Ukraine and the ensuing sanctions, and the price of oil, is not as strong as it was in early 2021, he said.
On Tuesday, 95-octane gasoline rose to €1.719 per liter at pump, from €1.699 in mid-December. Diesel currently costs €1.749 per liter.
"Fuel markets are so volatile, and there are so many factors that influence pricing, that a situation has arisen where one daren't make long-range forecasts, as it's not very practical," Raamat said.
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Editor: Andrew Whyte, Mirjam Mäekivi
Source: "Vikerhommik", interviewers: Kirke Ert and Taavi Libe