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France

Why Fuel Prices Will Rise Again – Economy

  • 1Coming into force of sanctions against Russia

  • The markets were quick to react to the new wave of international sanctions taken against Russia because of the war it is waging in Ukraine. As of 4 p.m. Monday, Brent North Sea crude, Europe’s benchmark crude, was trading at $86.70, up 1.50% from Friday night. Its American equivalent, the barrel of WTI, followed the same trend, at 81.07 dollars.

    This rebound, far from the highs of more than 130 dollars in March 2022, coincides with the entry into force of the embargo on Russian oil transported by sea to European territory. A measure decided several months ago by the EU, then the largest importer of Russian oil, in order to deprive Moscow of a major source of income.

    To make buying Russian oil a deterrent, the EU, G7 countries and Australia have also agreed to cap Russian oil prices at $60 a barrel. In concrete terms, service providers based in these countries (trading, shipowners, insurance, etc.), the vast majority in the maritime freight business, are prohibited from providing services to third countries, buyers of Russian oil, at a higher rate at the defined ceiling.

  • 2Downward black gold volumes

  • The Kremlin warned on Monday: it will no longer deliver oil to countries that have signed this price cap, which, it said, will have no impact on the continuation of its offensive in Ukraine. Russia, which is now subject to European, but also American and Canadian embargoes, will ultimately have no other choice but to reduce its oil production. Moscow thought it could count on Beijing to sell its crude, but China is seeing its economy slowed down by a new wave of covid-19 which, in fact, is drastically reducing its needs.

    For its part, OPEC (Organization of the Petroleum Exporting Countries) decided on Sunday to maintain the course decided in October. Far from increasing its production to compensate for the lack of Russian oil, it will reduce it, on the contrary, by two million barrels per day until the end of 2023. A limitation of volumes on the world market which aims, in interest of its member countries, to maintain prices.

    We will therefore have to do without a good part of Russian crude and share a little less abundant oil from elsewhere: mathematically, fuel prices can only go up…

  • 3The upcoming end of the rebate at the pump

  • The prices displayed in service stations should therefore resume their inexorable rise in the coming weeks. The first quarter of 2023 does not bode well. The combined effect of the sanctions taken against Moscow and the drop in production by the OPEC countries will be felt when the rebate at the pump of ten centimes per liter granted by the French State is due to end. No question of extending it beyond December 31, repeated Monday, the Minister of Public Accounts, Gabriel Attal, on BFMTV. We do not yet know the content of the specific targeted aid supposed to take over for the “big rollers”.

    What we do know, however, is that the EU has planned to apply, in February, a second embargo on all processed Russian petroleum products, including diesel. What, put end to end, make the price of a full tank jump again.



    letelegramme Fr Trans

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