US-Iran truce. Fuel prices will drop by this much. We know how Poles will save money

Pus reacts immediately. When will fuel prices drop in Poland?

The global oil market reacted most violently to the cessation of hostilities. The price per barrel dropped to approximately USD 90, although recently it reached over USD 110.

For now, however, the reason for the price drop is purely psychological. The announcement of the truce itself has not yet affected the supply of raw materials, but the market is hopeful that the Strait of Hormuz will soon be unblocked.

Read also: The US attack on Iran changes the world's strategies. Trump puts Poland in an uncomfortable situation

Rafał Zywert, oil market analyst at Reflex, points out that the market has felt relief, but the declines in fuel prices at Polish stations will be much slower than the increases. — We see a chance for the maximum price of diesel to drop to approximately PLN 7.50 per liter and approximately PLN 6.10 per liter of gasoline. These aren't huge drops, but the pressure will actually ease. Although ultimately everything depends on the durability of the truce and when tankers will start passing through Hormuz and on what terms – says Rafał Zywert. He adds that further declines will be possible next week if transport through the strait is uninterrupted.

However, the losses so far are significant, so the dynamics of declines will be slow. The US Energy Information Administration reports that in March the decline in oil production reached 7.5 million barrels per day, and in April the volume may increase up to 9 million barrels. That's about 30 percent. capabilities of the Persian Gulf states.

— Consider that tankers carrying crude oil from the Middle East take 4-6 weeks to reach Europe, so the supply gap will not be filled immediately. We also do not know what the scale of fees charged by Iran will be. This raises doubts and reduces the pace of reductions. We can already see that, for example, some customers from the Far East are cautious about ordering oil from the Persian Gulf for now, says the analyst.

Gas is also cheaper. On the TTF exchange in Amsterdam, the price of natural gas futures for one-month delivery fell by 17%. to EUR 44.13 per megawatt hour (MWh). Since the US and Israel attacked Iran over a month ago, the price of gas has risen to as much as EUR 74.

We are escaping from the ax of inflation

Lower fuel prices may bring relief to logistics and production affected by increases. And this, in turn, gives us a chance to avoid the inflation shock caused by the war in the Middle East.

— For now, we have escaped the inflationary axe. We are far from delighted, because the truce does not mean lasting peace, and it must still be respected. We will not avoid a partial price increase, but it seems that we are moving away from the worst-case scenario, i.e. real oil shortages that would stop the work of a significant part of the economy and prices that would inhibit economic activity. Let us remember that once production is stopped, it is then resumed quite slowly – it is not easy to open the tap again. If the lockdown continued for another month, we would be in serious trouble. Now it seems that it will be a bit easier, says Piotr Soroczyński, chief economist of the National Chamber of Commerce.

These sectors will breathe a sigh of relief

During the crisis, some producers in the Far East limited their operations, and the Polish chemical sector viewed the events in the Middle East with great concern. For these companies, access to cheap gas is a condition for business profitability, and crude oil is a key raw material used in production.

Piotr Soroczyński points out that unblocking trade gives a chance to maintain the desired scale of production.

As he adds, the effect of the so-called second round, i.e. an inflation-induced increase in wages that translates into a further increase in prices. — We most likely won't see it, the economist concludes.

Fighting against time on the fertilizer market

The blockade of the Strait of Hormuz also poses a serious threat to fertilizer production and, consequently, food prices. We wrote in Business Insider that the suspension of supplies, rising gas prices and rising urea prices will affect agricultural production – first plant production, and then animal production. The Persian Gulf countries accounted for almost half of the global sulfur trade, one third of urea and less than 20 percent. ammonia and phosphorus fertilizers. Analysts emphasized, however, that a negative scenario could be avoided by unblocking a key route.

— In a situation where the shock fades quickly and fertilizer prices return to their initial levels in the fall, these effects will be limited, said Jakub Olipra in an interview with Business Insider.

Read also: Will the war hit food prices? We know when the wave will come to Poland and what products it will affect [ANALIZA]

Shares are rising, the market is reacting

The vision of future peace supports investor optimism. Sobiesław Kozłowski, director of the investment advisory department in the private clients area of ​​Ipopema Private Investments, emphasizes that investors received the information about the temporary suspension of military operations with relief. — This can be seen from the scale of the movement — with a significant drop in oil, stock indices are rising and bond yields are falling, which means the market is discounting the lower inflation risk, he comments.

— A very strong recovery of the banking sector can be seen today in Poland and Europe. If the prospect of rapid interest rate cuts recedes, banks remain the natural beneficiaries of such a scenario. In the case of energy companies, the key will be not only the results for the past quarter, but above all how the market will begin to price future prices of raw materials and risks in supply chains, he adds.

Grzegorz Kowalczyk, journalist of Business Insider Polska