Motorists cheered lower gasoline prices in the new year as global oil prices continued to fall despite efforts by major oil-producing countries to raise prices by curbing supplies.
Oil prices fell as much as $2 a barrel to nearly $80 a barrel after OPEC+, the cartel of oil-producing countries led by Saudi Arabia and Russia, proposed increasing the amount of oil it sends into the global economy, aiming for even more abbreviations. more than 2 million barrels per day.
The cartel, which accounts for more than 40 percent of global oil production, has been trying to cut output after prices fell from around $98 in September on concerns about slower economic growth next year and weaker global oil demand.
Russia wants higher oil prices to fill its coffers and finance its invasion of Ukraine, while Saudi Arabia needs to keep prices around $86 a barrel to finance its economic transformation plan, which includes reducing its dependence on the International Monetary Fund .
The prospect of falling wholesale oil prices increases the likelihood of falling prices at retail petrol stations for UK motorists. Falling wholesale prices will also help ease inflationary pressures in the UK.
Falling wholesale prices will also increase pressure on UK fuel retailers to cut prices at the pump. Car companies say the savings need to be distributed quickly so drivers can take full advantage of the benefits rather than pad their profits.
Supermarket petrol prices are already under scrutiny from motoring groups, MPs, ministers and regulator the Competition and Markets Authority (CMA) as they fail to deliver fuel savings as quickly as prices rise.
The CMA noted that while wholesale prices fell in September and October, retail prices “have not fallen” and have increased by 11 pence per liter (PPL) for petrol and 13.9 PPL for diesel since May.
It found that the difference between the average price motorists pay at the pump and the price retailers buy for fuel was 17 to 18 people at the end of October, “significantly higher” than the long-term average of 5 to 10 people .
Oil sector experts have expressed doubt that the OPEC+ cuts will be maintained, given the voluntary nature of the deal and resistance from some oil-producing countries in Africa.
An attempt to strengthen the cartel by inviting Brazil, one of the world’s fastest-growing oil producers, into the alliance appears problematic after Brazil’s largest oil producer Petrobras said Brazil would not take part in OPEC’s coordinated effort and Brazil declined an invitation to join. keep oil supplies under control.
Experts say part of the 2 million barrels a day cut remains only on paper because some OPEC+ countries cannot physically produce their quotas. Experts estimate that if the cuts do occur, the company would only be able to supply about 1.2 million barrels per day. Goldman Sachs told clients that the OPEC+ move was a “temporary response” and “difficult to implement.”
“The market reaction implies a lack of confidence in the full effectiveness of the cuts,” said Christian Malek, an analyst at JP Morgan.
Source: I News
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