Fuel in the Czech Republic is currently the most expensive since last Christmas. A liter of the best-selling Natural 95 petrol is currently sold at petrol stations in the Czech Republic for an average of CZK 36.20, a week ago it was 18 pennies cheaper. Diesel has risen in price by 15 pennies, drivers now pay an average of CZK 35.13 per liter.
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This is according to data from CCS, which monitors prices. According to analysts, the rise in fuel prices is mainly due to the rise in the price of North Sea oil Brent, which for the first time in seven years climbed above $ 90 per barrel.
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The cheapest petrol is now refueled by drivers in the Hradec Králové region, where a liter is CZK 35.83 on average. Diesel is the cheapest in the Ústí Region, they sell a liter there for an average of CZK 34.72.
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On the contrary, the most expensive fuels are offered by pumps in Prague. A liter of petrol costs an average of CZK 37.31 in the capital. Diesel is refueled there for CZK 36.30 per liter.
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Prices may continue to rise
Three leading US banks are forecasting that the price of oil will reach the level of $ 100 per barrel by about the middle of this year, according to Lukáš Kovanda, chief economist at Trinity Bank.
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“For example, if a barrel of Brent cost some $ 105 more permanently in the middle of this year, so it would be about $ 15 more expensive than it is right now, fuel will, of course, continue to become significantly more expensive,” Kovanda estimates.
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High oil prices are now slightly eased by the strong koruna. According to the consensus of international foreign exchange market analysts, according to Bloomberg, the koruna should weaken against the dollar by the middle of this year, from the current exchange rate of approximately CZK 21.72 to CZK 22 per dollar.
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“So, if the Brent barrel came out to that $ 105 in the middle of the year and one dollar would cost the said 22 crowns at the same time, the Brent barrel would cost 2,310 crowns in Czech currency. That is about 18 percent more than what the Czech currency costs now, “says Kovanda.
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Fuels have become cheaper since the end of last November, when they reached their multi-year highs. In mid-January, however, the trend broke and fuels began to rise in price again. A year ago, petrol in the Czech Republic was almost eight crowns cheaper. At the end of last January, drivers paid 7.80 crowns less for diesel than at present.
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Geopolitical tensions
The price of Brent North Sea crude rose above $ 90 a barrel for the first time since October 2014. The price of oil is now supported by geopolitical risks related to Russia, a leading oil and gas producer. Since the beginning of this year, the price of Brent has been rising by approximately 14.5 percent, and since last January even by 72 percent.
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The conflict in the Middle East has also contributed to the rise in the price of “black gold”. On Monday, the United Arab Emirates intercepted and destroyed two rockets fired by Yemeni Shiite insurgent Husseins. The attack was the second in the UAE since last week when rockets hit a fuel depot in Abu Dhabi.
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Another factor that pushes the price of oil higher is the strengthening US dollar. The dollar index, which tracks the dollar’s performance against a basket of six leading commodities, reached its five-week high on Wednesday. A stronger dollar makes oil and other commodities more expensive from the perspective of other currency holders, which usually undermines demand.
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The rise in the price of the North Sea Brent is also due to the fact that oil reserves at the important US transhipment facility Cushing are now the lowest since 2012, Reuters reported.
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