I noticed that fuel prices have gone down in recent weeks… Is this sustainable?

2023-06-05 11:43:00

Question from Eloise

I noticed that fuel prices have gone down in recent weeks… Is this sustainable?

Hello Eloise,

As you pointed out, following months of steady risethe prices of your service stations have been on the decline for the past few weeks.

This is verified with the figures found on the official platform Fuel prices: between April 10 and May 10the average price of diesel in France fell from €1.83 to €1.69, i.e. fourteen cents less.

Other fuels are also down, although less substantial: the more expensive SP95 and SP98 both lost eight cents on the same dates. Since mid-May, fuel prices have stagnatedbut it remains on a high plateau.

The addition is therefore always salty for motorists, especially since the fall government aid has disappeared. All that remains is TotalEnergies’ promise to cap its prices at €1.99 until the end of 2023.

Producers try to boost oil prices

We can therefore wonder what to expect in the coming months. Can we once more witness a panic in the market, with an explosion in prices as a result? Or on the contrary, as you hope Eloise, are we heading for further declines? The answers to these questions are rather vague at the moment..

The key may be on the side of the producers of black gold, or rather the Organization of Petroleum Producing Countries, OPEC. In fact, these seek to raise prices, and therefore once once more drive up the price of a barrel, through reductions in supply. Clear, producing countries reduce the amount of oil put on the market international, to rarefy it.

However, this strategy does not always bear fruit: in early April, a first announcement of drastic production cuts sent the price of a barrel of Brent from the North Sea soaring, before falling rapidly in the days and weeks that followed. Another announcement of the same type in October did not allow producers to keep prices high either.

But now OPEC is doing it once more at the beginning of June, since Saudi Arabia announced a further drop in production from July: minus 1 million barrels per day for the world economy, until the end of 2024.

A price evolution that remains difficult to predict

Enough to push prices up once more at the pump? Impossible to predict at the momentbut one thing is certain for the Swiss bank UBS questioned by Capitalthe message sent by OPEC through this drop in production constitutes, in any case, a downward brake, even in a recessionary environment.

But it is precisely the risk of this recession that makes some people say that oil prices might stabilize, or even continue to fall, all the more so when we take into account China, whose demand for fossil fuels is slowing down.

The only certainty therefore in our service stations, despite the reductions, a return to prices below the bar of €1.50 per liter is unthinkable, for the moment at least.

Good day,

Writing

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