Regular diesel is expected to rise by an average of two cents this week and petrol 95 by about 2.5 cents. This is the 21st increase in diesel prices and the 24th for petrol since the beginning of the year. Compared to the prices in force on January 2, diesel is now 5.9% more expensive and gasoline almost 7% more expensive. The recovery of the economy has driven the rise in oil prices and the worsening conflict in the Middle East is not helping. There are already analysts pointing to the risk that oil prices could rise to $150 per barrel.
Although Israel does not player important in terms of oil production, the area where the conflict takes place is relevant at a strategic level in commercial exchanges, both in the import and export of oil and derivatives,” recalls Henrique Tomé, analyst at XTB, emphasizing that oil has responded to The tensions between Israel and Palestine that threaten international trade in that region and the risks of an escalation of the conflict could involve neighboring countries, which would create a new supply imbalance.
“The oil response reflected fears that new supply issues could emerge, further exacerbating the current supply-demand imbalance. It is important to remember that production levels have been artificially limited by various members of OPEC+ and the involvement of other neighboring countries. , such as Iran, could have a significant impact on commodity prices,” he points out.
Paulo Rosa recalls that about 21 million barrels of oil pass every day, equivalent to about 20% of global daily consumption, through the Strait of Hormuz, “the energy corridor and the world’s main bottleneck for oil and liquefied natural gas.” .
The senior economist at Banco Carregosa recalls that the Israeli-Arab war, also known as the Yom Kippur War, culminated fifty years ago in the oil embargo of the OPEC countries, at the time mainly Arab countries, against the countries that supported Israel . , especially Westerners, as a form of retaliation. The price of a barrel of oil tripled, pushing the global economy into stagflation (economic stagnation associated with high inflation, especially imported inflation, driven by the prices of more expensive energy products).
“Currently, and if the conflict in the Middle East worsens significantly, an oil embargo by OPEC countries would most likely have little effectiveness, justified by the declining weight of Middle Eastern oil in global consumption, by self-sufficiency of the US, because of the geopolitical interests between the OPEC+ countries and Israel, and especially because this embargo has been implicitly implemented by the OPEC+ countries for more than three years,” he argues, pointing to the production cuts implemented after the first confinement of the OPEC+ countries. pandemic, in 2020, and they have been maintained. As recently as September, Saudi Arabia and Russia extended their spending cuts until the end of the year.
And if it is true that Bloomberg Economics estimates that oil prices could rise as much as $150 a barrel if an escalation of the conflict leads to direct conflict between Israel and Iran, which controls the north of the Strait of Hormuz, slowing the growth of the global economy to 1.7%, causing “a recession that would take about a billion dollars out of world output.” It is no less certain that an escalation of this order ‘could be counterproductive for the Arab producing countries, and would contribute to accelerating the search for alternative energy sources, such as renewables, further boosting shale oil production [petróleo de xisto]especially in the US,” emphasizes Paulo Rosa.
Like the European Union, Portugal is still heavily dependent on fossil fuels, with oil and natural gas accounting for around 70% of Portugal’s energy matrix. In its 2024 budget proposal, the government foresees an oil price of around $81, compared to the $83 it forecast for 2023. “A scenario in which the oil price is 20% higher than assumed in the base scenario, that is an increase to almost 100 dollar would have a negative impact of 0.1 percentage point on GDP growth in 2024,” says the Banco Carregosa analyst, emphasizing that, faced with a possible increase in oil prices, with Iran’s direct entry into the conflict ” the effect on Portugal’s GDP would tend to be exponential and it would be difficult for Portugal to escape a recession with crude oil prices at $150.”
Henrique Tomé points out that in Portugal, regardless of oil price fluctuations on international markets, an increase of between 6.2 and 6.8 cents per liter is expected. “The recently released state budget showed the removal of the carbon tax, which was suspended at the beginning of this year to soften the impact of rising fuel prices. However, this could be a measure that could be subject to change if the oil price rises again as a result of the conflicts in the Middle East,” the XTB analyst emphasizes.
Ricardo Marques of the IMF also emphasizes the uncertainty about the evolution of the conflict in the Middle East, about the attitude of Saudi Arabia, which has cut its production by 20% in recent months to nine million barrels, and about the evolution of global fuel consumption. “In the specific case of diesel, it is necessary to monitor the development of the refining margin, which in a normal situation has a premium of between 15 and 20 dollars per barrel over Brent, and lately this has traded at a price premium of almost $35 per barrel,” he says, adding that “much will depend on the number of refineries Europe will have in operation (at the moment there are some shutdowns due to maintenance work), and the size of the import of this oil. product of Europeans which is at a very high level in October, below that of September”.
On the oil companies’ side, António Comprido, general secretary of Apetro, seems calm. “As long as the conflict remains limited, we do not foresee a major impact,” he says. In any case, it acknowledges that no major moves towards lower fuel prices are expected, especially if production cuts by Russia and Saudi Arabia continue and if the economic recovery in some countries, such as the US, is stronger than expected.
“Then there is the issue of uncertainty over the budget portion [em Portugal]. We don’t know whether the CO2 tax will remain frozen or not, whether the ISP will remain at current values… all this contributes to keeping expectations from moving in the direction of major declines,” he emphasizes.
Ilídia Pinto is a journalist for Dinheiro Vivo
Source: DN
