Fuel retailers: Falling oil prices will lower gasoline prices by 5 cents
Fuel prices in Estonian gas stations will drop by a further five cents per liter due to the fall in global oil prices and the trade war between China and the U.S.
The global oil price has dropped by 16 percent in a week. Prices at gas stations have not fallen by as much, but fuel retailers confirm that will happen soon.
"The price has already come down by about 3.5 cents. We cannot say which way the global market price will go. If there are major shifts in Trump's messaging, the price could turn upward again, but if the global market price continues to fall, then of course gas station prices will also move downward," said Kert Aader, motor fuels category manager at Circle K.
Alan Vaht, board member at Terminal, told "Aktuaalne kaamera" that fuel retailers are often accused of being slow to lower prices.
"That is actually not true. If we look at fuel price trends over the past 30 days, prices at gas stations have lagged behind global market prices by up to 8 cents. Given today's drop in the global market, we could see gasoline prices around €1.55 per liter," he said.
As of Wednesday, the price of 95-octane gasoline was €1.61 per liter.
The price of crude oil has fallen to its level from four years ago, but the prices of gasoline and diesel at gas stations are still 23 and 27 cents per liter higher than they were back then.
Vaht said there are several reasons for this, for example, the global market price of gasoline hasn't dropped as much.
"Additionally, VAT has increased from 20 percent to 22 percent over the past four years. On top of that, the excise duty on diesel fuel was raised last year," he told the show.
The trade war is reducing demand for oil. At the same time, OPEC+ has pledged to increase oil production, and all of this together is pushing oil prices down, said Lenno Uusküla, chief economist at Luminor.
However, U.S. oil companies cannot sustain production at current price levels in the long run.
"And that runs counter to Trump's desire for the United States to produce a lot of oil. In that sense, the range where oil prices could sit long term is somewhat higher than the current level. But in an uncertain world, we can certainly see such fluctuations. Where exactly this will end up, we don't know," Uusküla said.
So a lot depends on Trump's next moves, Uusküla added.
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Editor: Marko Tooming, Helen Wright
