Diesel prices in Czechia to rise further, analysts and IEA warn

Diesel prices in Czechia will keep rising. “Next week both petrol and diesel will go up by several tens of haléř. For diesel, I also expect the price cap to rise, and it could approach 49 crowns per litre,” said Petr Lajsek, an analyst at Purple Trading.

This is the second time this year the government has regulated fuel prices, this time from the start of October until at least the end of the month. It cut the excise duty on diesel by 2.35 crowns including VAT and capped filling-station margins on non-premium fuels at 2.50 crowns per litre.

According to the International Energy Agency (IEA), the main driver of a possible further rise is expensive shipping. Tanker rates have jumped and moving diesel between regions of the world has become costlier, so the agency expects so-called delivered prices, meaning prices including transport to the destination market, to start rising in Europe, Africa and Latin America. Diesel may be cheaper in another part of the world, but high sea freight costs make it unprofitable to import, which complicates the shift of fuel from regions with a surplus to countries with a shortage.

Stocks are shrinking

The situation is already tense. Last month the wholesale price of diesel in Europe and the US climbed to 220 dollars a barrel, roughly 4,800 crowns, more than double the level before the war in the Middle East. Consumption has barely dropped: diesel powers freight transport, agriculture, construction and industry, and some buyers simply cannot stop buying it.

Diesel stocks have fallen because of the conflict in the Middle East and Ukrainian strikes on Russian refineries. According to the agency, a US–Russia deal to ease sanctions and resume Russian diesel exports will not bring a turnaround either: because of refinery outages, Russia cannot quickly increase production.

The consultancy Energy Aspects said the oil industry is considering restarting some idled refineries because of record prices for diesel and jet fuel. It is not a quick fix: in the ideal case a restart would take about six months, realistically at least a year, and would require heavy investment. European refiners, meanwhile, are struggling with expensive crude and record tanker costs, and their profit margins have shrunk sharply in recent weeks. If some of them cut processing, the supply of diesel could fall even further.

In the United States, according to the Financial Times, a gallon of diesel cost an average of 6.28 dollars on Tuesday, roughly 36 crowns per litre. Expensive fuel is a sensitive issue there because of the approaching congressional elections. Southeast Asia is also hit hard, and in Africa the earlier growth in consumption has reversed: the continent depends on imports of petrol and diesel and is therefore especially vulnerable to further price rises.

Source: novinky.cz