The decrease is significant for the wallet of motorists. After having exceeded 2 euros per liter, the prices of gasoline and diesel have decreased for two months. The pumps show an average of up to 30 cents less than on July 1. The trend continues, according to the latest figures from the Ministry of Ecological Transition. On average, during the week of August 8, Diesel was sold at 1.79 euros per liter, almost 5 cents less than the previous week. The unleaded 95 registers a drop of 6 cents to reach an average of 1.74 euros per litre.
This decrease is largely linked to the international context. FranceInfo explains this drop in prices at the pump, even if fuels are more expensive than in previous years.
Oil Fall Canyon Prices
The price paid by motorists at the pump is directly dependent on the price of crude oil traded on the markets. This represents almost half the price per liter, according to the UFIP. Consequently, the drop in fuel prices “Excludes essentially because of crude oil”, according to Olivier Gantois, spokesman for the oil industry in France, interviewed by FranceInfo. The black gold courses had gone at the beginning of Russia’s invasion of Ukraine, in late February. But for more than two months, they have been falling.
The value of Brent, the European benchmark, is $93 a barrel on August 17, up from $110 in late July and $120 in early June, according to quotes published by Boursorama. The price of oil has registered its lowest level since the beginning of the war in Ukraine.
The risk of recession weighs on Western countries
“Oil is a thermometer of economic activity”notes Anna Creti, professor of economics at the University of Paris Dauphine, in The Figaro. The global economy needs oil to turn. When activity slows, the demand for barrels falls and the price with it. However, the economy of several Western countries is likely to be undermined. In the United States in particular, inflation is at an all-time high. In response, the American Central Bank (Fed) has increased its guide rates, which increases a recession.
In Europe, the situation is no more rosy. Eurozone growth forecasts have been revised down by the IMF. Its report on the outlook for the global economy provides GDP growth of 2.6% in 2022 and 2% in 2023, below its previous forecasts. In France, the Ministry of the Economy is also preparing for a slowdown in the economy in 2023.
The Chinese economy weakened by CovVI-19
In China, the situation is also worrying, especially as the country is still affected by the Covid-19 epidemic. True to its “zero covid” strategy, Beijing continues to strictly limit several million people when cases are detected, weakening its economy.
The IMF indeed observes “A sharper-than-expected slowdown in China since the monitoring of Covid-19 borders and lockdowns”. Now China consumes a lot of oil. When the world’s most populous country hits the brakes, therefore, it is global oil consumption that declines.
The prospect of an agreement on the Iranian nuclear reassures
Iran is a major oil producer: the ninth, according to the American Information on Energy Agency (in English). In 2018, before the United States withdrew from the Iranian nuclear deal, Tehran exported an estimated 2.45 million barrels a day, according to the US Congressional Search Service. But because of the tensions, the sanctions are weighing on Iran and preventing it from selling its barrels on world markets.
In recent days, the negotiations are arguing and the prospect of a new agreement is becoming clearer. “It seems that they really try to reach an agreement”, watch Mizuho analyst Robert Yawger with AFP. If you are successful, “It is the possibility of seeing a million more barrels per day in the market”underlines Robert Yawger, and more in the medium term.
Without having been able to export freely for four years, the country could also quickly release some 100 million barrels already pumped. This news reassures the markets, which anticipate an increase in volumes. Therefore, when the resource is more abundant, the price tends to fall. For the specialist, the fall in the price of oil observed in recent weeks is also “Mainly linked to Iran”. “If the Iranian nuclear deal has increased, it could raise prices by almost 80 dollars”anticipates Edward Moya, specialist market analyst at OANDA, in a note quoted by AFP.
In France, the pump will increase and decrease the bill a little more
A measure will also temporarily affect the price at the pump in France. The 18-cent fuel surrender will increase to 30 cents for September and October, before falling to 10 cents for the months of November and December.
Despite this aid and the decrease that has been taking place for two months, prices remain at a high level, at more than 1.70 euros per litre. In August 2019, the liter of diesel cost 1.41 euros. A year later, it even dropped to 1.23 euros.
However, this price drop must not continue. From the end of December, a European embargo on Russian oil is due to come into force. The spokesman for the oil industry in France, Olivier Gantois, wants to be reassuring and says that this embargo “It will have no impact on the consumer.” Rather, it plans to stabilize prices. “In my opinion, we will remain at prices like that until the end of the war in Ukraine,” he believes.
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