Fuel prices will continue to rise. Thursday's cheapening at the pumps is just “an oscillation” / What experts warn

Thursday morning's fuel price drop of 35 paise for petrol and 30 paise for diesel should not be confused with a change of direction, energy specialists say. Rather, it is a brief pause in a trend that remains essentially up. At the same time, a realistic plan to reduce consumption is needed in Romania, as is happening throughout Europe.

The fuel market operates according to a global logic, and Romania is no exception, according to an analysis by the Intelligent Energy Association.

The price at the pump is only the last link in a complex chain that starts with international oil quotations, continues with refining and transportation costs, and ends with a high level of taxation. In this context, small daily variations, be they increases or decreases, are technical adjustments rather than fundamental signals, the analysis claims.

Thursday's decline can be explained by a natural correction after a period of accelerated price increases, the analysis says.

“In recent weeks, diesel has come dangerously close to the psychological threshold of 10.5 lei per liter, fueled by geopolitical tensions and supply uncertainties. In such moments, oil companies sometimes adjust prices downwards, either to temper consumer reaction or in response to a slight relaxation of international quotations”, states Dumitru Chisăliță, the president of the association.

Price stability remains an illusion

The bad news is that beyond this occasional fluctuation, the reality remains the same: the market is volatile and the outlook is far from reassuring.

Diesel is more vulnerable to external shocks than gasoline, being closely linked to the transport and industry sectors. Any disruption in global supply chains is quickly reflected in the price.

In addition, the price structure in Romania drastically limits the potential for significant discounts. Taxes and excises are another major, rigid component that doesn't go down with oil. Thus, even when the raw material becomes cheaper, the final consumer only feels part of this reduction.

“Therefore, the enthusiasm generated by today's drop must be viewed with caution. It is not the beginning of a trend, but only an oscillation in a system dominated by uncertainty. For drivers, there remains a small breath of air. For the economy, however, the signal is clear, the dependence on external factors continues to dictate the pace, and the stability of fuel prices remains, at least for the moment, an illusion,” the specialist says.

In the end, the question is not whether prices will drop a few more bucks, but how sustainable the entire system is in the face of shocks that seem to become the new normal.

We waste time on irrelevant details instead of taking concrete action like the rest of the civilized world

The opinion is also shared by Otilia Nuțu, expert in energy within the Expert Forum. She says that the restart of the Petrotel Lukoil refinery will not have a significant impact at the pump, as announced by the Minister of Energy, Bogdan Ivan.

“The price of gasoline and diesel can be influenced a little up or down by excise taxes or the reopening of a refinery, but we are effectively wasting time on irrelevant details. The fundamental problem remains: the Strait of Hormuz is closed, it will remain closed for a long time, and even if it reopens by some miracle, it will take months for ships to pass through, ship captains to venture, insurance companies to take the risk, plus ships leaving from the region to reach consumers (after another 1-2 months),” she says.

In addition, some of the oil production capacity in the region was also significantly affected by the war. In short, almost 20% of the global oil supply disappears in the medium-long term, at least a year or two, if not all, she believes.

“Of what we consume 100 at the level of the planet, we will have to consume 80, period. This will be done at high costs, with massive restructuring and on supply (possible increase in production in other parts, change of some routes), but especially on demand (destructive – through bankruptcy, or constructive – through electrification, for example)”, stated Nuțu, in a post on Facebook.

Are we keeping up with the world or are we literally stuck on the bandwagon?

In his opinion, the main concern should be a constructive way to reduce demand.

“No, we won't be able to consume everything as before, you can't consume 100 when you only have 80, but we can replace oil in an accelerated way from some of the current uses, primarily transport. Here Romania can stubbornly claim that we can consume all 100 until the gas station runs out OR it can accelerate investments in modern technology with European and private money. We keep pace with Europe and the civilized world, or we stay behind cart, literally. So far, I have the impression that at the political level we are going for the second option, the opposite of what is happening everywhere on the planet”, believes the expert.

What we took with one hand from the Russians we now give with two hands

In his opinion, Russia has a lot to gain from the Iran war.

“The only relevant thing that can be said about the reopening of the Petrotel refinery is what I was saying this fall: unfortunately, under the current administration, American sanctions are not very credible. They were useful in creating a bit of chaos for a few months and the Russians were forced to sell oil at huge discounts for a while, but the party ended with the start of this completely pointless war.

Currently, Brent oil sells for 95, Russian oil for 110-120 dollars, so what was taken from the Russians with one hand from November to February is given with two from March indefinitely. At least until Ukraine finishes all the export infrastructure by sea for the Russians”, Nuțu continued.

Fuel became cheaper in OMV Petrom gas stations on Thursday

The price of a liter of gasoline fell by 35 banis on Thursday morning, while diesel fuel went down by 30 banis in Petrom and OMV stations, owned by the largest oil company in Romania.

Thus, in Petrom stations, standard gasoline costs 8.37 lei per liter, at MOL – 8.82 lei, and at OMV – 8.48 lei per liter, according to data from the Fuel Price Monitor application.

The premium range of gasoline is sold for 8.85 lei at Petrom, 9.45 lei at MOL, 9.11 lei at OMV and 9.29 lei at Rompetrol.

Standard diesel is 9.28 lei per liter at Petrom stations and 9.37 lei at MOL and OMV, and premium diesel costs 10.05 lei at Petrom, 10.19 lei at OMV and 10.24 lei at MOL gas stations.

The IMF has warned that a global recession is coming

Oil prices have fallen in recent weeks and hit $95 a barrel on Thursday, down from a peak of $112 a barrel on March 23 and another peak of $110 on April 6.

However, the IMF warns that there is a risk of a global recession, which will also extend into next year, according to the OilPrice.com publication.