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Factors behind the Rise in Fuel Prices in Recent Weeks

Hungary Today 2023.08.10.

Fuel prices at Hungarian gas stations have been rising steadily for several weeks. There are a number of factors behind the rise since the beginning of July, which Index asked experts about.

The price increase so far is mainly due to the news that Saudi Arabia and Russia have decided to cut oil production. Although the Organization of the Petroleum Exporting Countries (OPEC) is abiding by the agreed production cut, Saudi Arabia has reduced its output by one million barrels per day, which will help Russia tighten supply, the website reports.

Olivér Hortay, head of political foundation Századvég’s energy department, emphasized that

OPEC’s new decision is economically and geopolitically unfavorable for Western countries.

OPEC’s move is worrying, as it is the first time in decades that the cartel has gone against the interests of the Western alliance and America, just as it is doing now, the analyst told Index.

Eszter Bujdos, managing director of refueling website holtankoljak.hu, told the portal that the cartel decided to tighten their supply in September to try to push oil prices up. In this way, we went from a price of $70-72 per barrel to $85 per barrel. However, this price level seems to be stabilizing, the expert added.

The good news is that after the drastic price increases of recent weeks, the price of diesel will not change from Friday, while 95-octane petrol per liter will become three forints (0.0077 euros) cheaper,

announced Bujdos. However, prices are currently determined by the forint exchange rate, she added.

Weakening of the Forint Results in Rise in Petrol Prices
Weakening of the Forint Results in Rise in Petrol Prices

Barely a week into August, and the price of diesel has already risen by 40 forints per liter.Continue reading

Erste’s oil and gas market analyst Tamás Pletser was more pessimistic about the topic. In his opinion, the European economy is “coughing” and there was negative data from China. He stressed that oil prices could continue to rise due to supply cuts, and if the dollar continues to strengthen due to an increasingly strong U.S. economy, “the basically overvalued forint could weaken.” On a positive note, the analyst added that the price of diesel used to range between $12 and $18 per barrel, but is now around $35 per barrel, while gasoline used to range between $18 and $25, but is now only $28.

Pletser also noted that

the Orbán government will raise excise taxes on gasoline and diesel by 41 forints (0.11 euo) gross per liter at the beginning of next year to meet its EU obligations.

Bujdos justified this tax increase to the portal by saying that Hungary has had the lowest excise tax in the European Union for a long time.

With such prices, the question of fuel tourism also arises, because it could easily happen that the prices in neighboring countries will be lower, Index wrote. According to Bujdos, refueling in neighboring countries is currently worthwhile only in the direction of Romania.

It is clear that the macroeconomic reasons already mentioned have also been reflected in the prices of neighboring countries,

emphasizes the expert. In other neighboring countries, prices are generally similar to those in Hungary: “It is not worth driving across the border to fill up for 10-20 forints (0.026-0.051 euros) less. The conscious refueling of the population is noticeable in the traffic figures with a decrease of 25-30 percent,” concluded the managing director of holtankoljak.hu.

Small Relief for Motorists as Fuel Prices Drop
Small Relief for Motorists as Fuel Prices Drop

This is not the first time in recent weeks that Hungarians can fill up their tanks for less.Continue reading

Via Ungarn Heute, Featured image via Facebook/MOL

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