Oil prices will only ease next year

In July, an average of around 5.5 million barrels per day could not be produced in the Middle East. This corresponds to around five percent of global demand. The ongoing blockage of the Strait of Hormuz is leading to a high global inventory draw of 1.91 million barrels per day. This means that around 3.6 million barrels would be missing from the world market.

However, rising prices also lead to lower demand. This year, daily global demand for crude oil is expected to fall by an average of 1.6 million barrels, around half a million more than previously thought, according to the International Energy Agency’s (IEA) monthly report for August published on Wednesday. This is the sharpest drop since the pandemic.

reactivation

Both the US Energy Authority and the Energy Agency do not see a recovery until next year. As soon as the decommissioned capacities are reactivated, global supply is expected to exceed demand and push the Brent price down to an average of $69, according to the EIA. And the IEA expects daily demand to increase by an average of 2.4 million barrels.

There are currently major bottlenecks, especially with diesel, as a result of the attacks on refineries in Russia and Saudi Arabia. At the beginning of the week, fuel prices rose by almost ten percent. According to the ÖAMTC, Super rose by 10.4 cents to an average of 1.796 euros per liter in July compared to the month, and diesel by 12.7 cents to 1.904 euros. In many places, drivers currently have to expect prices of around two euros per liter for diesel, while petrol is still just under 1.80 euros.

“The prices of oil products such as diesel are already high compared to crude oil because refineries in the Gulf states and Russia have failed due to the effects of war,” says Commerzbank chief economist Jörg Krämer. “Inflationary pressure is likely to increase somewhat from this side.” In Germany, fuel prices rose by 23.0 percent year-on-year in July, significantly more than in the previous two months (June: +11.3 percent; May: +18.0 percent). The inflation rate rose by 2.8 percent after 2.3 percent in June.

In the USA, however, the price increase rate weakened slightly in July. Goods and services rose by 3.4 percent compared to the same month last year, after 3.5 percent in June. Fuel prices fell slightly.