Business

Fuel prices unlikely to be raised as oil prices stabilise

Fuel prices in Sri Lanka are unlikely to be increased as tensions between Iran and the US eased over the course of the past week, helping world oil prices stabilise after a panic-induced sharp spike.

Following the killing of Iranian Major General Qasem Soleimani of the Islamic Revolutionary Guard Corps on 3 January, prices of oil rose considerably from it levels on 31 December.

Oil prices reached their highest since 31 December on 6 January, a day before Soleimani’s burial. Prices were slowly reducing during the retaliation attack by the Iranian Government where two airbases housing US troops in Iraq were hit by more than a dozen ballistic missiles. As of Thursday (9), oil prices had returned closer to their previous levels.

Accordingly, the Singapore Platts price of a barrel of petrol was $72.15 as of 31 December 2019 and it rose by 2.14% to $73.70 on the day of the killing, which was 3 January. The petrol price subsequently increased by a further 1.6% on 6 January as the price of a barrel was recorded as $74.90.

Price of a barrel of petrol as of 8 January was $73.50 which was still a 1.87% increase compared to the levels as at 31 December. While data was not available of Singapore Platts for Friday (10), the price of a barrel of Brent crude was $65.28 compared to the $68.27 on 7 January. According to BBC, the price of Brent crude jumped by more than 3% and at one point on 3 January hit $69.50 a barrel, the highest since September.

Meanwhile, the Singapore Platts price of a barrel of diesel increased by 1.7% on 3 January to $80.91 from $79.54 from 31 December 2019. It subsequently increased by a further 0.6% to $81.44 on 6 January, the highest since 31 December. However, it went down to $79.42 on 8 January which is 0.15% lesser than the level on 31 December.

Soleimani was killed in a drone attack outside the Baghdad International Airport airstrike by the US military, carried out according to the directives of American President Donald Trump.

Tensions between the US and Iran have been rising since 2018, when the US pulled out of a nuclear deal meant to curb Iran’s nuclear programme and prevent the country from developing nuclear weapons.

The fuel price formula is adjusted based on Platts Singapore benchmark prices which is the daily average of all trading transactions between buyers and sellers of petroleum products as assessed and summarised by the Standard and Poor’s Platts, a Singapore-based market wire service.