Over the course of the past three weeks, green diesel prices have dipped by as much as 20-30c/l. According to suppliers, the major driving force behind this has been the Chinese COVID-19 lockdown, currency fluctuation and a reduced worldwide demand.
China is the largest importer of oil in the world. Cities across China are currently enforcing lockdown measures in an attempt to control outbreaks, which is hampering its demand for oil. According to ANZ (the Australia and New Zealand Banking Group), this could have an implied oil demand of around one million barrels per day lower than average.
On the other hand, the euro has finally begun to rally against the dollar. This is important as oil is traded in dollars, meaning currency fluctuations can have a huge impact on Irish pricing.
In July, the value of one euro fell below that of one US dollar for the first time in 20 years. With one euro capable of buying up to $1.19 last year, that drop represents a significant fall. At the end of September, one euro would only buy $0.97, while today one euro is worth $1.03.
Despite minor fluctuations, fuel prices for the most part began to dip over the past three weeks. As we went to press this week, prices of 1.09c/l to 1.18c/l (VAT inclusive) were being quoted for marked gas oil (MGO), more commonly known as green diesel. This means green diesel is back about 20-30c/l on average from 1.37-1.38c/l (VAT inclusive) three weeks ago. However, suppliers on Tuesday evening were noting an incoming increase of 2c/l, the first upward trend in two-and-a-half weeks.
Despite the price of oil dropping in recent weeks, international markets remain volatile. On Tuesday evening, Brent crude oil was ever so slightly on the rise, trading at $83 to $84/barrel.
To put this into perspective, this is the same price Brent crude oil was costing in mid-January.
Brent crude did hit a low of $81.5/barrel on 26 September, but as mentioned already, the euro also hit a new low against the dollar at the same time so the price drop was hoovered up.
Russian ban getting closer
The European Union has said it will ban Russian oil product imports, on which it relies heavily for its diesel, by 5 February. This will follow a ban on Russian crude taking effect in December.
European traders have been rushing to fill tanks in the region with Russian diesel before the EU ban begins in February.
So far this month, diesel from Russia has made up 44% of Europe’s total imports, compared with 39% in October.
Russia remains the continent’s largest diesel supplier even though reliance has fallen since the country’s invasion of Ukraine.