BARREL PRICE. This weekend, the price of a barrel of Brent oil seems to be rising slightly, to 109 dollars this Friday, March 18. Will the general drop in recent days have a real impact on refueling? How can this drop be explained? The explanations.
[Mis à jour le 17 mars 2022 à 08h18] The price of a barrel of Brent oil seems to have gone up slightly again this weekend. After stabilization, the barrel is measured at $109 this Friday 18th March. Once again, the volatility is felt, which is not to reassure French motorists. The latter have been hit hard by the successive increases at the pump since the start of the war in Ukraine on February 24, 2022. So, how to approach these successive price changes? Is this relative decline over the past few days good news for your tank of gas?
Since the start of the week, we have seen a small respite with relative stagnation in prices. These fell back below 100 dollars at the start of the week before rising again. This is not to displease French households who have observed a certain smoothing of prices for several days at the pump, far from the surge of last week (2.25 euros on average for a liter of diesel). And as good news never comes alone, Prime Minister Jean Castex announced two aids on fuel, Wednesday March 16, during the press conference presenting the resilience plan. First, a discount of 15 cents on fuel for all French people from April 1 and for 4 months. Then, more help from 35 cents per liter of fuel fishing for fishermen hard hit by the price explosion. Aid valid from April 17 to July 31 to allow them to go back to sea in decent conditions.
But then, how to explain this drop in prices so quickly? Recently, talks between Vladimir Putin’s Russia and Volodymyr Zelensky’s Ukraine resumed through videoconferences and negotiations between the two sides. The prospect of a ceasefire is not completely excluded and allows, for the time being, to calm the price of the barrel and therefore the repercussion on the price at the pump in France. This fall and then stagnation in the price of a barrel of oil can also be explained by other simple phenomena. Europe is still extremely dependent vis-à-vis Russian gas, it still cannot position itself strongly in favor of an embargo. Joe Biden, the President of the United States, did it. But Europe remains much more reluctant to this idea. This is why the price of a barrel of oil has calmed down slightly. Pay attention, however, to the oil price volatility, extremely dependent on the next European decisions and the progress of the war in Ukraine. The rise of the euro against the dollar in recent days also gives hope for a slightly more lasting drop in fuel prices in the days to come. A liter of diesel around 2 euros should apply this week in French service stations, far from the 2.25 euros on average across the country last week.
Faced with the unprecedented increase in the barrel of oil last week, close to 140 euros per barrel, member countries of the International Energy Agency (IEA) should release no less than 60 million barrels of oil of their reserves. One objective, to stabilize a market in panic. So, should we expect a further rise in fuel prices in France, when the prices charged have already reached record highs? As fuel prices are strongly indexed to the price of a barrel of oil, a further rise in pump prices is to be expected despite the new aid measure put in place by the government. French consumers could well be the first victims of a potential embargo. Difficult for Europe to turn around quickly, alternatives are possible, but they will take time before being put in place.
The war in Ukraine casts doubt on the supply and price of energy. Aside from gas, one question remains central and arouses curiosity, what is the price per barrel of oil in this mess? Rising almost constantly since December 2021, the price of a barrel is now in free fall, to the tune of 101 dollarss Tuesday, March 15.
When you fill up with gas, the taxes represent 60% full. And these taxes, they, in spite of the war in Ukraine, fluctuate rather little. In particular the domestic consumption tax on energy products (TICPE), which simply represents the fourth revenue of the State, behind VAT, income tax and corporate tax. the fuel price leaving the refinery, it corresponds to 1/3 full of gasoline. Notably influenced by the price of a barrel of oil on international markets. Gas station attendants will have no choice but to pass on this increase to the price per litre.
Keep in mind that there is a lag time between the increase in the purchase price of a barrel of oil and the real impact on prices at the pump. This time varies 8 to 10 days about. In an attempt to curb this phenomenon, several aids have been put in place and distributed by the Government. In particular the inflation bonus granted to 38 million low-income households, as well as the revaluation of the mileage scale for 2.5 million tax households. The threat of a embargo European on Russian gas could cause the price of a barrel of oil to explode at $300or even more.
According to INSEE, the Russia is the 3rd world producer of oil with 10 million barrels per day, of which 2 million transit to Europe. The Franceshe matters 9% of its crude oil since Russia. And the countries which could substitute the major role of Russia in the export of oil are not legion. Nigeria, Angola and Libya, for example, are not even meeting their own production targets. the Nigeria (9.6% of oil imports in France), theAlgeria (10.3%), and theSaudi Arabia (11.8%) remain crucial trading partners for France to whom the government could turn more to supply the country.
“We have significant strategic oil stocks which cover almost three months of consumption and allow us to deal with supply disruptions. The French are not at risk of running out of fuel or gas for heating in the coming months” declared the Minister for the Ecological Transition, Barbara Pompili on February 23. The European Union could even decide to release part of its strategic oil stocks to counter the rise in fuel prices in the face of this major market disruption. A decision taken only three times in history, for example after Hurricane Katrina in the United States.