Oil Prices Reach Four-Year High
In September, London’s Inter-Continental Exchange Futures Europe showed a trend of growing oil prices. Specifically, throughout the month the price advanced by 5.24 USD per barrel (6.77%) on average and today the cost came to 82.67 USD per barrel. Since the beginning of August the price of oil on average has increased by 8.42 USD per barrel, that is, by 11.3%. At the beginning of the year the average cost was 67 USD per barrel. Brent crude hit its highest level since November 2014.
According to the Union of Oil Product Importers, current oil price increases are due to the following factors: as it is currently known, sanctions against Iran are due to come into effect in early November. Respectively, export of oil from Iran is expected to decrease significantly. It should be noted that at the moment Indian and Chinese companies are refusing to purchase oil from Iran. The USA, the initiator of the sanctions, maintains its position on the issue and aims to drop oil exports from Iran to zero. OPEC+ members have decided not to increase oil production and so far are sticking to the plan. It is however possible that increased production and export by Saudi Arabia (by 0.5 million barrel per day) could have a positive influence on oil prices (i.e. reducing the prices). However, this is highly dependent on negotiations with Kuwait about resuming neutral zone oil output.
In terms of the Georgian market, GEL currency rate has a big influence on oil prices. In August the GEL depreciated against the US Dollar and by the end of September 1 USD amounted to 2.61 GEL. Respectively, due to the increase in international prices and the recent devaluation of GEL against the US Dollar, the fuel prices on the Georgian fuel retail network rose. In particular, the rise in petrol prices on branded petrol stations comprised 5-6 tetri per liter. Currently, the average retail price of fuel on the branded petrol stations of Georgia’s retail network are as follows: Regular petrol - 2,34-2,52 GEL / liter, premium type petrol - 2,47-2,60 GEL / liter, superior petrol - 2,57-2,68 GEL / liter, Euro diesel fuel - 2 , 50-2,64 GEL / liter.