BAKU, Azerbaijan, July 11. The gasoline prices are expected to grow from the current average of $1.47 per liter against the backdrop of the current geopolitical situation in the world, Trend reports.
According to experts, there are three main reasons for rising fuel prices. Firstly, this is due to the rise in oil prices. As it’s known, 50 percent of gasoline consists of crude oil, which is the main ingredient, and now it became much more expensive. Oil prices are forecasted to continue rising.
Thus, Fitch Solutions upgraded its Brent oil price forecast to $105 per barrel for the end of 2022 compared to $100 per barrel earlier. This is primarily due to the EU’s decision to partially restrict oil imports from Russia. Besides, OPEC+ is still far behind its monthly production targets, while the ability of Saudi Arabia and the UAE, which own most of the world's spare capacity, to significantly increase production in the near term, is doubtful.
At the same time, the growing political instability in Libya has caused new disruptions in production, which are likely to continue.
The second reason for the rise in gasoline prices is that as the weather gets warmer, refiners are shifting to summer blends of gasoline. This mixture also costs more, which drives up the price of gasoline.
Thirdly, despite rising prices and the highest inflation in 40 years, people are still planning to go on holiday this season. Since 80 to 90 percent of summer travels are made by car, demand for gasoline is expected to increase, pushing up prices.
How do the global fuel market developments affect the economy of Azerbaijan?
At present, there are no problems with the sale of any type of fuel in Azerbaijan. The sale of all types of fuel is carried out as usual. The retail price of RON-92 gasoline is 1 manat (59 cents) per liter, while a liter of RON-95 gasoline is sold for 1.6 manat (94 cents).
The price of RON-92 gasoline in the country is regulated by the Tariff (Price) Council. Prices for other brands of gasoline depending on their market value. However, the increase in the price of RON-95 gasoline won’t affect the prices of goods in the country due to the use of diesel and RON-92 gasoline by the local carriers. Public transport, cargo carriers, private cars, cars of various services, and others are refueled with local gasoline. RON-95 gasoline is used by high-class cars, the number of which is very low in Azerbaijan.
Moreover, next year it’s planned to start production of EURO-5 gasoline in Azerbaijan. Two million tons of RON-92 and RON-95 gasoline per year are planned to be produced at the Baku Oil Refinery named after Heydar Aliyev. RON-95 gasoline will account for 40 percent, and RON-92 - 60 percent.
The production capacity of the refinery at the first stage will fully meet the needs of the Azerbaijani market for diesel fuel, as well as RON-92 and RON-95 gasoline, and those volumes which won’t be used in the Azerbaijani market can be exported.