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How do Chinese electric cars and exchange rates affect fuel prices in Estonia?

Как китайские электромобили и валютные курсы влияют на цену топлива в Эстонии?

Fuel prices in Estonia have remained relatively stable this summer season – from May to July, but prices at petrol stations have started to fall since August. Indrek Sassi, Head of Motor Fuel Pricing at Circle K, explained what factors have been influencing prices recently and how important the Asian market is in this. “For small Estonia, the most important factors influencing fuel prices are always the global economic processes that we have to follow. In addition, our country is unique in that we do not have our own oil refineries – we have to import all the fuel we need and store it somewhere. This makes us even more dependent on what is happening in the world,” noted Indrek Sassi. So what has been influencing fuel prices most recently? China’s slowing economy and high electricity consumption Economic changes in China have had a particularly strong impact on global fuel prices in the past few months. China, the world’s second-largest oil consumer after the US, has seen its economic growth slow, which has reduced demand for petroleum products. Moreover, China has seen a significant increase in alternative energy sources, especially electricity generation, which has further reduced demand for oil. In addition, the US has ended its summer peak in gasoline consumption, which has also reduced global demand. At the same time, the US has also increased its own oil production. All these factors have led to an increase in global fuel reserves, which has contributed to an overall decrease in prices. Geopolitical tensions and supply chain problems The geopolitical situation in the Middle East has been significantly affecting prices for some time now. The escalation of the conflict between Israel and Hezbollah, the closure of oil fields in eastern Libya and the halt in exports in late August have created uncertainty in the market. The news of the resumption of operations at the fields in early September coincided with rumors that OPEC+ would increase production in October. The rapid fall in oil prices that followed this news forced the OPEC+ cartel to consider extending production cuts, which immediately pushed prices up. Geopolitical tensions are always an important factor influencing fuel prices, as they can disrupt global supply chains and cause supply problems. Regional differences and other factors Fuel prices are also significantly dependent on other economic factors, the most important of which are exchange rates and inflation. Since fuel is quoted in dollars on the international market, a stronger euro can lower fuel prices in Estonia. A strong euro means that imported fuel becomes cheaper, which in turn helps keep retail prices lower. The main differences in prices between Estonia, Latvia and Lithuania are mainly related to tax policy. For example, Latvia has the highest fee for creating a mandatory strategic fuel reserve. Prices also depend on regional market conditions, including the economic environment of a particular country and region. Upcoming price changes The conflicts in the Middle East and economic changes in Asia will likely affect fuel price fluctuations for some time to come. The effect of legislative changes is also expected in the Baltic countries, as both Estonia and Lithuania will increase excise taxes on motor fuel next year. In Latvia, a law is being considered that could affect the use of biocomponents in fuel from 2026, which could also lead to price changes. Read RusDelfi wherever it is convenient for you. Follow us on Facebook, Telegram, Instagram and even TikTok.

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