Senior sources in the fuel industry today predicted that the price of gasoline would fall by NIS 0.15 per liter next month, on the heels of a NIS 0.27 price cut last month. The current self-service consumer price of 95 octane gasoline (including VAT) of NIS 6.38 per liter is projected to fall to NIS 6.28, because the excise tax for gasoline is being raised by NIS 0.05, meaning that the net cut will be only NIS 0.10.
The reason for the expected price cut is a dramatic fall in oil prices last month. Over the past two months, oil has lost a third of its value, and the current price is the lowest since March 2009. The main reasons for the fall in oil prices are record production by the OPEC cartel, a surprising increase in the weekly oil reserve, and the talks for the removal of sanctions against Iran. Removal of the sanctions is likely to significant boost the supply of oil at a period of relatively low demand. The current price of a barrel of Brent oil is $46.80, following an 18% plunge since the beginning of the month. The price of a barrel of WTI oil is now $40, down 20% since the beginning of the month. Market analysts believe that the drop in oil prices will continue in the coming months, and Morgan Stanley thinks it will also continue in 2016. The demand for oil is projected to fall because of seasonal factors, and the supply of oil is expected to continue growing.
Australia and New Zealand Banking Group (ANZ) writes, "OPEC is expected to boost crude oil production to 33 million barrels a day, the most ever, after international sanctions are removed against Iran." By itself, Saudi Arabia has increased its daily oil production by 430,000 barrels to 7.37 million barrels. Another reason for the decline in oil prices is the expected increase in the dollar exchange rate. The minutes of a meeting of the US Federal Reserve Board published yesterday indicate that most US Federal Reserve officials believe that the economic conditions suitable for an interest rate hike are in store. An interest rate hike will affect the dollar exchange rate and lower the price of oil.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015