How to explain the downward trend in fuel prices?
By the drop in the price of a barrel of crude oil, which was $88 at the beginning of July compared to $72 currently, a drop of $16, which is equivalent to the 13 cent difference observed at the pump over the same period.
This drop in the price of a barrel is essentially due to the concern of the financial markets, which, given a slowdown in China’s growth, fear that its oil needs will also be less significant and that this will generate surpluses.
It should be borne in mind that in 2023, between the beginning and the end of the year, the global need for crude oil increased from 101 to 103 million barrels per day, and China alone brought 1.5 million of the 2 million barrels more.
However, a certain number of geopolitical factors are rather pushing prices upwards?
It is true that other parameters, such as the increase in demand, the fact that the OPEC producer countries and Russia are renewing their agreements to limit production, the fact that Russia, the world’s third largest producer, is at war, all this could contribute to an increase, but we can see that the embargo has had no consequences and that the situation in the Near East has not deteriorated into a conflict in the Middle East.
So prices ultimately do not increase, especially since production continues to grow, particularly in the United States and Guyana. So there is no shortage, the markets are firm but prices are not increasing.
Could this situation last?
For two years, the price range of a barrel has been between 75 and 85 dollars. At the beginning of the week it was at 72 dollars and since this morning at 75, which means that we are returning to this range, and this could indeed last.
Demand, after growing by 2 million barrels per day in 2023, only grows by 1 million barrels per day in 2024 and it should be the same in 2025. Furthermore, the geopolitical criteria that I have just mentioned remain, so prices should remain stable.
