Fuel prices in Latvia will continue rising, say experts

Fuel prices are rising as the instability of the war continues. Price increases will go on until there is clarity about the sanctions introduced by Western countries against Russia in relation to its aggression in Ukraine, said experts surveyed by Latvian Television.

On March 8, gasoline cost an average of €1.80 per liter in Latvia's major fuel station chains, while diesel was €1.70 per liter. 

The price of Brent oil on March 8 at 17:00 was $132 a barrel. For comparison, in April 2021, it was $69 a barrel. And so far, there are no signs that price hikes will stop. The whole world is currently waiting for sanctions against Russian energy sources to be introduced and to what extent. The uncertainty affects current prices, experts say.

Citadele Bank economist Mārtiņš Āboliņš said: “How much oil will be bought from Russia, whether it can be sold on global markets, and whether new sanctions will appear [will determine the price].”

If Western countries introduce an embargo on Russian oil, then prices will continue to rise. On Tuesday the U.S. announced a ban on imports of energy resources — oil, gas and coal — from Russia.

“Of the approximately 100 million barrels a day consumed globally, Russia produces around 11 [million] and consumes 4 [million]. So a big enough producer. “f this production is disappearing from the world market, then the price has to rise so far as demand is declining,” said Āboliņš.

Thus, the price of oil can reach $200 a barrel. In Latvia, this would mean fuel prices at EUR 2.50 per liter, said Āboliņš.

In order to prevent this, it is necessary to find other countries from which to buy oil purchased in Russia so far. One of the options is the United Arab Emirates. However, according to Ojārs Karčevskis, head of the Latvian Fuel Traders Association, there are technical difficulties. But there are other options.

He said: "Very much looking forward to removing sanctions from Venezuela's extraction and removing sanctions from Iran's extraction. If all this is done in the coming days or weeks, then we can expect prices to stabilize. I mean, world stock prices."

Meanwhile, the public initiative platform “Manabalss.lv” has collected signatures of 10 thousand citizens for an initiative to reduce excise duty on fuel. The author of the initiative points out that reducing the tax on fuel would be a way of compensating fast-rising fuel prices for the consumer.

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