David Blevings, spokesperson for the Irish Petrol Retailers Association said, “Unfortunately the instability and concern around the Trump decision to withdraw from this deal has made traders nervous and is adding a premium to crude oil prices. In turn this is increasing the cost of wholesale fuel costs which has to be borne by retailers. We have seen an increase in local terms and this is unwelcome news for consumers and retailers who have no choice but to pass on increased costs. Remember almost 60% of the pump price is taken by the Government in duty/VAT and carbon tax and is out of the retailers or indeed, wholesalers control. We would advocate that the Government should have a ceiling price at which fuel duty is reduced when prices increase to assist consumers and businesses alike.
Speculation is we could see $80/barrel by the summer and with OPEC and non-OPEC countries threatening to further tighten supply, this could be a reality. Of course this is good news for Saudi Arabia who are preparing to float Aramco. However, the oil nations need to play a balanced card as increasing prices too high will force more and more motorists around the world to switch over to electric vehicles reducing overall oil demand and there is talk that we may see increased production at the next OPEC meeting as prices are still stubbornly high.
The one bit of positive news is that as global oil prices rise, US shale production becomes more viable and we will see shale make an appearance to assist push prices back down.
Looking forward we see the tension in the Middle East reducing as discussions there reach a peaceful solution and American shale production ramps up pushing prices back to the $50-60/barrel range. We would be confident that prices will return to a more ‘normal’ level by the end of the year”, added David.