The liter of gasoline with 95 octane has exceeded the psychological barrier of 1.40 euros this week, a level not seen in Spain since 2014. That is the price at which it was sold this Monday on average at gas stations in Spain, according to the Oil Bulletin of the European Commission, published this Thursday. The cost of diesel also continues to rise, with the liter at 1.26 euros, on average. In this way, filling a 50-liter tank of gasoline costs around 70 euros this week, while if it is diesel it will be about 63 euros, 16% more than in January.
The cost of fuel has become more expensive week by week since last November due to the rise in the price of a barrel of oil, which represents around 30% of the final cost of fuel and is the main variable that determines its value. “It is the price of the raw material, crude, so it is a fundamental factor,” explains Nereida González, an analyst at Afi Research.
In the same way that the price of crude oil has so far pushed up fuel, it could lower its price in the medium term. According to the agency Reuters, OPEC +, formed by the Organization of the Petroleum Exporting Countries (OPEC) and a dozen allies, such as Russia, could soon close an agreement to increase the oil in circulation, thus lowering the cost of a barrel.
“If supply is increased, it could ease the upward pressure on crude oil,” says González. “However, it will depend on how much production increases, because in an environment in which any restriction due to covid-19 may be temporary, the demand for crude will continue to grow.”
In anticipation of an agreement in OPEC +, the futures price of a barrel of crude brent it’s down 2.75% on the market since Tuesday. The Afi analyst also attributes this drop to the sharp increase in infections from the Delta variant, which threatens to delay economic recovery.
The price of crude oil has doubled in half a year
The price of a barrel of oil has grown unstoppably since the end of 2020 due to the arrival of the first vaccines, which marks the economic recovery. Since then, crude oil has continued to become more expensive due to the growth in global consumption and transport, which will continue to increase fuel consumption in the coming months. Today, the price of a barrel brent, a reference in Europe, exceeds 73 dollars, while in November it cost 38. It has almost doubled, triggering the price of gasoline and diesel.
This upward pressure on the cost of crude oil is also due to the fall in supply due to the cut in oil production. The US – the world’s largest oil producer – has frozen its investments in the extraction of fossil raw materials due to new environmental targets. However, Roberto Scholtes, Director of Strategy for Spain at the investment bank UBS, believes that this trend will change in a few months: “Production by fracking [extraer crudo mediante la rotura de las rocas] in North America it is profitable with current oil prices and a moderate increase in production is foreseeable in the coming quarters ”.
On the other side of the scale, OPEC + reduced crude oil sales in May 2020 to offset the fall in demand due to the pandemic and took 10 million barrels a day off the market (10% of world crude consumption). Despite the recovery in fuel consumption in recent months, OPEC still keeps the tap half closed and exports about 5.8 million barrels a day less than before the pandemic, according to agency calculations. Reuters.
In this context, economic officials are urging OPEC, which produces more than a quarter of the crude consumed in the world, to increase the sale of oil, since at this moment more is consumed than is sold. Approximately 3 million barrels a day are needed to balance the market, a gap that will widen in the coming months, as global fuel consumption will continue to grow in parallel with increased vaccination.
“OPEC + needs to turn on the taps to keep the world’s oil markets adequately supplied,” the International Energy Association (IEA) called in June.
In fact, OPEC itself estimates that next year the world will consume as much oil as before the pandemic, exceeding 100 million barrels a day in the second half of 2022, according to its monthly report for July published this Thursday. Now 94.5 million are consumed.
At its monthly meeting in July, OPEC + sought to agree to a slight and progressive increase in its exports, which would allow it to balance supply and demand and lower the price of a barrel, ultimately reducing the cost of gasoline for consumers. However, an atypical confrontation between Saudi Arabia and the United Arab Emirates (UAE), two of the three largest OPEC exporters, blocked the agreement, as the latter was not in favor of extending the reduction in crude exports until the end. 2022 – they expire in April of that year. This shock further raised the price of a barrel brent, which reached $ 77 last week, the highest since 2018.
But everything indicates that they will finally close a pact that rebalances the market. Saudi Arabia and the UAE have sat down this week and are moving toward a deal, Reuters advanced, though the pact is not yet closed. According to the agency, OPEC would allow the Emirates to slightly increase its crude exports in exchange for unlocking the agreement raised last week. That pact assumes that OPEC would increase its global oil sales by two million barrels a day between now and December, below what is necessary, but that it would help loosen prices.