Nordea’s economist is 100 percent sure: This is how the price of gasoline will change

The price of oil has fallen as a result of the agreement of intent between the United States and Iran. The agreement suddenly brings a lot more supply to the market, which exceeds the demand of buyers.

But what about the price of gas?

Nordea’s economist Juho Kostiainen is 100 percent sure that the drop in oil prices will be visible at the gas pumps of Finns if oil refining margins normalize. The question mark is when the change will be seen.

“There have been bottlenecks in oil refining and margins have risen. I can’t say in what time frame they will come down, but yes already at these oil prices, the price of gasoline would probably be somewhere between 1.70-1.80 euros per liter”, says Kostiainen.

Transport expert of the Central Chamber of Commerce Hanna Kalenoja believes that during the summer we can see prices below 1.9 euros per liter.

“If the price of oil remains low, the decrease may be another ten cents from 1.9 euros.”

Kalenoja points out that the price of gasoline has already started a cautious decline.

“Prices have already come down and it can be seen at the pumps, although usually the drop in the price of oil moves there more slowly,” he says.

According to Polttoaine.net, the average price of 95E gasoline was 1.933 euros yesterday and 2.035 euros for 98E gasoline. On Monday, the price of oil again hovered around 72 dollars per barrel, while at the beginning of the summer the price was over 93 dollars per barrel.

A quick turnaround confuses the market

The situation on the oil market is extremely contradictory. Not long ago, there was even talk of a shortage of oil, but now there has been a momentary oversupply on the market.

Kalenoja emphasizes that it is probably a temporary phenomenon.

“This oversupply is short-term. The market just cannot immediately absorb all the oil that has been released,” he says.

The background, according to him, is that production and consumption already had time to adapt to the scarcer supply during the crisis.

The invoice may be short

Although the price of gasoline is now falling, the trend may soon turn in the other direction.

“The outlook is that prices may go up again when stocks begin to be filled and the market seeks a new balance,” says Kalenoja.

Kostiainen also sees similar risks.

He warns that if the situation between Iran and the United States starts to escalate, the drop in prices may slow down. Whether the Strait of Hormuz remains open is also a key question.

In addition, Kostiainen says that the fall in prices can be slowed down by the fact that warehouses emptied during the war are suddenly filled.

“If stocks are replenished now, it will increase demand in the short term and can slow down the price drop.”

The consumer still has to wait

Even though oil is getting cheaper, the drop in the price of gasoline is visible to consumers with a delay. The reason is, among other things, the structures of the processing chain and warehouses.

“If the fuel was previously made from more expensive oil, it cannot be sold immediately for less than the stock value,” explains Kalenoja.

That’s why you shouldn’t expect big and quick price reductions.

“We won’t see very big declines until the oil market balances,” Kalenoja estimates.