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Fuel prices will go up. Experts gave a non-optimistic forecast

Author: Yulia Kiris

The first month of the new year ended on a positive note for Ukrainian drivers. After all, prices for petrol, diesel and gas have been on a steady downward trend. However, there will be no more cheapening of fuel, and Ukrainian motorists should expect a gradual rise in prices. tried to figure out what will happen to the cost of fuel in Ukraine.

The average price of fuel as of the end of January was UAH 50.74 for A-95 petrol, UAH 50.82 for diesel fuel, and UAH 27.38 for car gas.

• excluding the occupied territories (Crimea, Sevastopol, part of Donbas)
• According to the data of the A-95 Consulting Group

Compared to the prices recorded at the end of November last year, they have actually fallen by 3 to 5 hryvnias.

Against the backdrop of a general decline in fuel prices, even premium A-95 pleased drivers with its affordability. The cheapest was available at 48.98 UAH/l, the most expensive at 58.99 UAH/l.

However, autogas has fallen in price the most significantly over this time. Prices at petrol stations fell by almost UAH 10.

Why did prices fall?

All fuel supplied to Ukraine is imported. Therefore, we are directly dependent on supplies from abroad. It is difficult to predict prices. For example, a year ago, oil prices were $95 per barrel and were expected to rise by almost a third. Instead, we got a price below $80. It was the decline in oil prices that allowed sellers to keep attractive figures on the boards of Ukrainian petrol stations for a relatively long time.

“Another significant factor that led to the decline in fuel prices is a radical change in the fuel supply system itself. During the years of the full-scale war, Ukraine got rid of Russian diesel and petrol and allowed more than 700 small importers from Europe to enter the market, giving Ukrainian consumers the right to choose and completely eliminating the shortage,”

– said Sergiy Kuyun, Director of A95 Consulting Group.

What will be the price tags at petrol stations now?

Experts say there will be no more fuel price cuts. On the contrary, Ukrainian motorists should expect a gradual increase in prices. This is mainly due to the disturbing events in the world.

Trouble in the Red Sea creates a high probability of complicating the supply of raw materials to Europe, the Middle East and Asia. Due to the Houthi attacks on merchant ships (oil tankers), fuel ships will have to be diverted again, which means using a longer and more expensive route. Under such conditions, prices for oil products will inevitably rise. The Red Sea accounts for half of global maritime trade, and the Houthi attacks have already affected pricing in many countries.

For Ukraine, it will be important to keep the situation in the seaports of Romania and Poland open, as these countries are currently our main suppliers of petrol.

The situation with prices, particularly for autogas, may be slightly affected by a renewed blockade of its supply.

“The Polish-Ukrainian border allows almost half of all imports of automotive gas to cross. If there is a recurrence with the Polish border, there may be minor changes. But we have learnt to live under the blockade and it does not threaten us. Cars will go around – through Slovakia, Romania…”

– says Sergey Kuyun, Director of A95 Consulting Group.

If there are no excesses with the supply of autogas, then prices will not rise, experts assure.

Another destabilising factor is the US election race, the debate in the US Congress over the escalating illegal migration scandal, and the decline in US oil reserves and production.

“This has already led to the fact that oil prices have been rising for a week. The countdown has begun. Prices have already risen from $78 to $83 per barrel. Accordingly, the purchase prices for Ukrainian companies have also started to rise. By the end of the week, prices in small chains and the economy segment will be noticeable. And within two to three weeks, there will be a global market reaction,”

– says Sergiy Kuyun, Director of A95 Consulting Group.

Even if prices per barrel remain at the current level, the cost of petrol and diesel for Ukrainian consumers will still increase by several hryvnias, experts say.

“As soon as the price of oil goes up on the global market, we should be prepared for a 2-3 UAH increase per litre in 20-25 days. And it always happens,”

– says economist Oleg Pendzin.

But among the internal factors that can negatively affect the cost of fuel, some experts say the situation with the exchange rate. So far, it is under control and minor losses in the hryvnia’s position do not lead to higher fuel prices. However, if the exchange rate slips, Ukraine will need more national currency to buy imported goods, which will automatically lead to higher prices for petroleum products.

What will be the cost of fuel in spring?

Fuel prices will definitely not decrease in spring, as they are now.

“The situation is changing rapidly. Even the situation with the Red Sea… everything was normal, quiet, a few shots and the price per barrel jumped by $5. What we can say for sure is that there will be no deficit. It cannot be,”

– explains Sergiy Kuyun.

Experts assure us that March will pass without any major changes in petrol and diesel prices. And in April and May, we will probably see a rise in prices due to demand in connection with spring field work.

“This will continue for a certain period of time, we will see a slight increase in diesel prices, by UAH 2-3. Then it will roll back again when this wave of spring field work is over,”

– says economist Oleg Pendzin.

What will continue to keep the price stable is autogas. This is due to its excessive supply, primarily from the enemy country. Russian gas has literally flooded Ukrainian petrol stations today, experts of the A-95 Consulting Group state.

While last year the influx of cheap liquefied natural gas from Russia was quickly curbed by legislation, it is now difficult to do so. According to the documents, the occupiers are selling European, certified autogas, and not reselling it as they used to. Therefore, it is almost impossible to find out the origin of the raw material.

Such autogas is 20% cheaper. It will restrain the overall price increase for a certain period. At the same time, it will disrupt Ukraine’s well-established supply systems for high-quality imported products. Autogas imported from Europe will simply not be competitive.

The SBU’s sanctions should help remove Russian gas from Ukraine. In the meantime, a large number of Ukrainian drivers will continue to fill their cars with enemy fuel. In general, no matter what price fluctuations occur, the only thing experts assure us is that Ukraine’s stocks of all types of fuel will be at their highest in the coming months.