Fuels: “We cannot yet speak of an outbreak…” why prices at the pump are on the rise again

How big is the increase in fuel prices this week?

According to figures from the Ministry of Energy, the average price per liter of super unleaded 95 rose in one week from 1.72 to 1.73 euros and that of diesel remained stable at 1.59 per liter. I predict a continuation of this increase in the coming days.

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DECRYPTION. Fuels: can the war in the Middle East drive up prices at the pump?

For what ?

Because, in around ten days, the price of a barrel of crude oil rose from 72 to 78 dollars. This rise is essentially due to the escalation of military maneuvers in the Middle East, the involvement of Iran and incursions into Lebanese territory. But I would point out that this is an increase of around 10% and that we cannot yet speak of a surge in oil prices. Unlike, for example, when Russia invaded Ukraine, when the barrel of crude oil rose by $40. Today, the oil markets do not seem to believe in a general conflagration in the Middle East.

Should we still be worried about a possible Israeli attack on Iranian oil installations?

The American presidency has advised Israel against carrying out such strikes. And I tell you my note that before the Americans agree to pay more for their fuel due to events in the Middle East, a lot of time will pass! They may be the policemen of the world, but they are not about to put their hands in their pockets for that. On the other hand, if the conflict between Israel and its neighbors were to cause a shortfall in production relative to demand, then oil prices would soar. Including in the United States, because the American motorist, like the French, buys his gasoline at the international price of petroleum products. Everyone is in the same boat.

How high do you think oil prices could rise in the medium term?

Since the end of 2022, a barrel of crude has fluctuated between $75 and $85. During the month of September, we fell below this range. And we’re right there today. I think we have found a balance and it could last well. It is a price zone which, in fact, satisfies all the players in the oil markets. This is enough for conventional oil producers, and in particular OPEC and Russia, to have revenues in line with their budgetary needs. This is enough for US shale oil production to continue to grow. And this is a price level that does not cause a revolution among buyers at the pump.

So oil production is not declining?

On the contrary and unfortunately for the climate. We were at 103 million barrels produced each day in 2023. And the International Energy Agency, which revises its forecasts every month, is counting on 104 million barrels per day at the end of 2024 and on 105 million barrels per day in 2025. Even if demand slows in OECD countries, it continues to increase in Asia.

How long does it take for changes in barrel prices to be reflected in prices at the pump?

We were able to see this summer that the repercussion of the differential, upwards or downwards, was almost instantaneous. Buyers, who replenish their stocks daily, decide the selling price based on the daily crude oil price. And if the French market is so reactive, it is because the sector is experiencing heightened competition. If a drop is not immediately passed on, customers will flee.