Fuel prices are on an alarming trajectory as predictions indicate they may surge to $100 per barrel, a development that even worries the oil industry itself.
When the price of oil crosses a certain threshold, it proves painful for all parties involved. The $100 per barrel mark is seen as an unattractive tipping point for everyone in the industry.
After spending the majority of the current year below the $90 per barrel mark, Brent crude, the global benchmark, is now inching closer to $100, with the possibility of surpassing it. This comes after Saudi Arabia and Russia announced their intentions to extend voluntary production cuts until the end of the year.
In Cyprus, prices based on data from the retail fuel price observatory and the weekly report from the European Commission’s Oil Bulletin offer little optimism that prices will start to decrease. Consequently, there is growing political pressure on the government to reinstate fuel subsidies, which were abolished on July 1.
Based on the data readily available, the average price of diesel may exceed €1.70, while the average gasoline price could reach €1.60.
Finance Minister Makis Keravnos, in public statements, has expressed his intention to continue supporting citizens against the rising costs in a targeted manner. This includes maintaining a portion of the electricity cost subsidy for vulnerable consumer groups, even after the removal of general subsidies.
Data released by the European Commission’s Oil Bulletin on September 18 shows that the average price of diesel reached €1,676.51 and 95-octane gasoline was priced at €1,586.37. In the previous measurement on September 11, the diesel selling price was €1,664.49, and gasoline was €1,583.09.
The average selling price of diesel in the EU-27 with a reference date of September 18 is €1,787.34, and the price for 95-octane gasoline is €1,839.32. In the Eurozone-19, the diesel selling price is €1,845.38, and gasoline costs €1,920.80.
Since September 8, when Brent surpassed the $90 per barrel mark, oil prices have further strengthened by 2.6%. During the same period, the stock index of oil companies has seen a decline of 5.3%.
As noted in an analysis by The Wall Street Journal, one reason investors are turning away is the impact of high prices on demand. In general, when oil prices exceed $100 per barrel, they tend to become a pain point for businesses and households, ultimately resulting in reduced consumption.
Moreover, when the price of oil crosses a psychological threshold, governments’ reflexes are triggered. Last year’s record profits for oil companies prompted the European Union to impose a profit tax on fossil fuel companies.