“As long as the war in Ukraine lasts, we will remain at very high crude oil prices”said Olivier Gantois, president of the French Union of Petroleum Industries (UFIP) while gasoline prices fell below the two euro mark.
franceinfo: How to explain this drop?
Olivier Gantois: There is a global fear of recession. Who says economic recession, says drop in demand for oil and drop in demand for prices. The market is somehow anticipating this recession, which is feared not only in North America, but also in China. But let’s not forget that we are still at very high crude oil prices, since we were at 114 dollars per barrel.
This price displayed at the pump takes into account the State discount of 18 cents?
Since April 1, there has been a state discount of 15 cents excluding tax and 18 cents including tax for those who pay VAT, which is considerable. And so, this discount, apparently, is going to be extended until September 30, so two months longer than what was initially announced.
Is it a one-time drop or will it be long-term?
I’m afraid it’s only temporary. That’s not why prices will go up, but in any case, I think prices will stay high for a long time, at least as long as the war in Ukraine lasts. There are two phenomena that are causing prices to be high: the first is global oil demand which, after the 2020-2021 period of Covid-19, has returned to its pre-Covid level, around 100 million barrels per day; the second since the end of February, it was the war in Ukraine which created tension on the markets and therefore caused prices to rise even more, hence the 114 dollars per barrel we have today’ today. As long as the war in Ukraine lasts, crude oil prices will remain very high.
An increase in oil production could lower prices?
Absolutely. That is to say that the organization of oil producing countries, OPEC plus Russia, meet every month to decide on their level of production for the following month. And so, they met on July 1, and decided that in August, their production will increase by 600,000 barrels per day compared to July. So, yes, production is increasing because demand tends to increase.
Will this relax the market?
Relaxing the market certainly, on the other hand lowering prices, everything will depend on demand. If demand remains high because the global economy is doing well, then prices will remain high. If there were a recession, as some analysts fear, it could bring prices down, but I don’t want to promise anything because nothing is certain.
Can you reassure us about a possible lack of oil in the coming months because of the embargo on Russian oil?
Yes, I can completely reassure you since we have already been working with the French authorities for several months to prepare for the embargo which was decreed on June 4, which gives us six months to organize ourselves to completely stop oil supplies. crude and two more months for diesel. The good news is that we’re not going to run out of oil since the oil we imported from Russia, whether it’s crude oil or diesel, we’re going to import from North America, the Middle East, from India. There are other sources of supply, some of which have already been implemented, which allows me to say that there will be no disruption of supply. However, prices will remain high. You can’t have it all right now. If we are ready to buy Russian crude oil, we pay much less. If we don’t want Russian oil, we pay a little more.
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