Fuel prices in Ukraine and around world plummeting - Kuiun

Serhii Kuiun, director of the A-95 Consulting Group, noted that fuel prices in Ukraine and around the world are plummeting.

He announced this on his Facebook page, according to the Ukrainian News agency.

“This is the best-case scenario one could possibly imagine, and one we’ve been waiting for so long. If the price of oil drops to USD 50 per barrel, it will cause the Russian economy to collapse. And even USD 60 would be fine,” Kuiun wrote.

The expert emphasized that there are good reasons for such forecasts, as sanctions against Iran are expected to be lifted, and production and exports are set to increase in Venezuela and the UAE—the latter of which even left OPEC for this purpose.

He believes that Saudi Arabia—which drove prices down to USD 15 per barrel in 2020—will not stand idly by and watch the market slip away.

"Currently, oil is already at USD 80, and diesel at USD 880. Over the past two weeks, prices have dropped by USD 220. Prices at the pumps have also fallen. From a peak of UAH 92 per liter, diesel has dropped to UAH 80, and half of the chains, including Ukrnafta, are already below UAH 80 per liter. They say they’ve even seen prices as low as 73 in some places… Prices are falling every day,” Kuiun added.

According to him, the issue lies in the inertia of supplies: at the start of the war in Iran, existing contracts and volumes meant that supplies couldn’t be scaled back as quickly as, for example, in Poland and Germany.

And today, this is slowing down the price drop, although it’s not very effective.

Small retail chains, in particular, are actively cutting prices; they lack large inventories and are trying to regain the sales volume that Ukrnafta took away from them this spring with its “social” pricing.

Overall, the Ukrainian market is moving in a similar way to the markets in Europe and the United States.

Kuiun added that gasoline is a notable exception: there are local supply difficulties with it, including due to the transition to the E10 standard effective July 1.

In particular, one of the import channels—Moldova—has dropped out of the picture, as it offers only E0.

As a result, wholesale prices remain high, eroding the entire margin at the pump (wholesale: UAH 70–72, while the average price at gas stations is 75 UAH/liter).

We expect the situation to be resolved by the end of the month.

The expert also added that despite this challenging period and losses caused by the sharp drop, the market is generally optimistic, as falling prices offer hope for a revival in demand; however, it cannot be said that demand has drastically decreased.

Rather, it is a matter of a redistribution of sales, which always occurs during price shocks. The desire of some to regain market share and the efforts of others to maintain it will serve as a powerful stimulus for further competition, which is always good for everyone.

As the Ukrainian News agency earlier reported, retail fuel prices at Ukrainian gas stations fell by between UAH 0.08 and UAH 3.16 from June 15 to 19.