Declining global fuel prices draws speculation on local reductions

1. Picture
A pump at an Amman gas station. (Photo: Ameer Khalifeh/JNews)

AMMAN— A decline in fuel prices globally drew speculation that Jordan’s government will reduce the price of fuel derivatives locally for the first time this year, most likely at the beginning of September.اضافة اعلان

The speculation is not based on any credible information, but it takes into consideration general factors, such as a dwindling demand caused by a global recession, a rise in production by OPEC and a slowing Chinese economy.

Energy expert Amer Al-Shobaki forecasted that the price of gasoline, of both grades sold locally, will fall by at least 4 percent in the next two weeks, and before the next price list for September is announced.

“With the fall of global gasoline prices, I expect that the price of octane 90 gasoline locally will be reduced by not less than 40 fils per liter, and octane 95 gasoline will be reduced by no less than 70 fils per liter,” Shabaki told Jordan News.

Jordan increased the price of both types of gasoline five times since the beginning of this year, to unprecedented records in the history of gasoline prices in Jordan, with a liter of octane 90 gasoline reaching 990 fils and of octane 95 reaching JD1.3 per liter.

But oil prices now are lower than they were when Russia waged a war on Ukraine last February, having dropped more than 30 percent in barely two months, according to the New York Times.

On Monday, news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark, according to the newspaper.

In the US, gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide. Prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things as diverse as food and airline tickets.

But the newspaper warned that it was too early to celebrate. “Energy prices can spike as easily as they can plummet, unexpectedly and suddenly,” it pointed out.

Shobaki speculated that the global reduction in gasoline prices was caused by several factors, namely a declining demand resulting from global economic recession, lockdowns in China, a rise in US crude stocks, and a rise in oil production in the OPEC Plus group.

Other reasons, he added, is hopes for the revival of an agreement on a nuclear deal with Iran, “which could plunge oil prices to $85, if completed”.

Another energy expert, Hashem Akel, said it was premature to predict a decrease in fuel prices locally. He said there were two weeks till the end of the month, and any political event might affect fuel prices.

“Since the beginning of August the barrel of Brent crude oil started at $100 a barrel, then decreased to $93, then climbed to $97, and now stands around $98,” Akel told Jordan News.

“Therefore, we can’t predict an increase or decrease before we get closer to the end of the month,” he explained.

Mashhor Abu Eid, a spokesperson for the Ministry of Energy and Mineral Resources, said that the Petroleum Derivatives Pricing Committee determines the fuel prices at the end of each month.

He said the committee’s decision is based on a review of international prices and according to the pricing formula in force since February 5, 2008 in line with directives by the Council of Ministers. He did not discuss speculations on a possible decrease in fuel prices.

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