Australian drivers are being warned not to expect any immediate relief from sky-high petrol prices that have risen back beyond $2.10 a litre despite steep falls in the cost of crude oil this week.
Fears about a possible global recession and the impact of further pandemic lockdowns in China on fuel demand led to nearly a 10 per cent drop in the benchmark Brent oil price on Wednesday morning, its biggest daily percentage fall since March 9, before it edged slightly higher to $US104 a barrel.
Motoring industry groups on Wednesday said ongoing volatility in oil markets meant the latest crude oil price drop was unlikely to lead to significant relief for drivers.
“The long and the short of it is 2022 has been probably one of the most volatile years we’ve ever seen – so, with these things going up and down, we take them all with a bit of a grain of salt,” said Bridget Ahern, of the NSW-based National Roads and Motorists Association.
“If things do stabilise, and we do kind of stay around that $US100 mark, then absolutely, we would expect to see prices come off considerably … but we have seen this happen a couple of times in the past few months, but they haven’t stayed there.”
ANZ commodity strategist Daniel Hynes said a lack of output from refineries producing petrol would also contribute to keeping fuel prices high. “The flow-on impact to Australian consumers may be a little limited in the shorter term,” Hynes said.
“The delay we tend to see from global oil prices to petrol prices in Australia can be weeks, if not months. So, we’re not likely to see a fall in petrol prices next week as a result of the [oil price] collapse.”
Hynes said a temporary reduction in the national fuel excise from 44.2¢ to 22.1¢ a litre was also due to expire in September. Prime Minister Anthony Albanese has recently ruled out extending it.
Australia’s petrol prices are linked to international oil markets via the Singapore refined unleaded benchmark Mogas 95. The Brent oil price makes up the biggest cost of Mogas 95 benchmark, which in turn represents about half of the price of petrol in Australia.
Across Australia and worldwide, petrol prices have been rising for months because of sharp increases in the cost of crude oil. A global supply crunch caused by oil production failing to keep pace with rebounding post-lockdown demand has been exacerbated by rolling economic sanctions placed on Russia, a major oil producer. The United States, United Kingdom and some countries in Europe have banned the importation of Russian oil cargoes in a bid to starve Moscow of the revenue it needs to fund the war in Ukraine.
Extracted in full from: No relief in sight for motorists as $2.10 petrol returns (smh.com.au)