In connection with Russia's full-scale invasion of Ukraine, the oil price surged and in the summer of 2022, a barrel of Brent oil cost up to 112 dollars. The surge in oil prices also caused inflation to skyrocket.
However, the situation is now completely different. For the first time since 2021, the same oil barrel costs less than 70 dollars on the world market. The decline has effects on motorists who notice the difference when filling up at the gas station. The reference price for 95-octane gasoline is currently at 16.59 kronor, the lowest level since 2021, while the diesel price is also noting a clear price drop.
Bottom not reached
The bottom has not been reached yet, at least not according to major banks Citigroup and JP Morgan Chase, which both predict an oil price of 60 dollars per barrel next year, reports news agency Bloomberg.
The explanation is the low-conjuncture that has become a fact in both Europe and China, where Chinese industry is crucial for how great the demand for oil will be. However, there is another crucial factor, and that is supply. While the oil cartel Opec+ with Saudi Arabia at the helm has reduced production to drive up prices, it has been counteracted by the US increasing its production.
Demand less than supply
Currently, global production amounts to 1.5 million barrels per day, 50 percent more than global demand, writes Bloomberg.
A low oil price also eases the pressure on the world's central banks, which are now expected to lower interest rates as inflation has sharply fallen back. Next in line is the European Central Bank (ECB), which will issue a new interest rate decision this week and is likely to lower it.
It's very welcome, especially for central banks. It relieves the inflation pressure, which is exactly what they want to see, says Christof Ruehl, senior analyst at Columbia University to Bloomberg.
Facts: Gasoline prices
TT
Leading chains are lowering the prices of gasoline and diesel on Wednesday.
The reference price for 95-octane gasoline at manned stations is being lowered by 10 öre to 16.59 kronor per liter. It is the lowest price since August 2021.
The diesel price is being lowered by 20 öre to 16.69 kronor per liter. To find a lower price for diesel, you have to go back to May 2021.
The ethanol price (E85) is being lowered by 10 öre to 13.34 kronor per liter.
