Oil prices will rise again this year, but much less than in 2021

Oil prices rose again last year. Despite the major fluctuations and unrest on the oil market caused by the war in Ukraine, the price increase was significantly lower than in 2021. Demand for the fuel increased significantly last year due to the economic recovery from the corona pandemic and the price surge.

A barrel of Brent oil, the benchmark for Middle East, Europe and Africa oil, currently costs about $84. That is around 6 percent more than at the beginning of the year. In 2021, Brent oil became more expensive by more than 50 percent. The price of a barrel of American WTI oil (of 159 liters) is now $79. That is around 4.5 percent more than at the beginning of 2022 and follows a price increase of 55 percent in 2021.

The oil price showed fluctuations

Oil prices have fluctuated wildly this year. A high of over USD 130 per barrel was reached at the beginning of March. That was the highest level since 2008. This advance followed Russia’s invasion of Ukraine in February and concerns about tight supply and uncertainty about fuel shipments.

inflation

However, oil prices fell rapidly in the second half of this year. The reason for this was the interest rate hikes by the central banks, which want to combat high inflation. Higher interest rates not only dampen inflation, but also economic growth. As a result, recession fears flared up. During an economic downturn, demand for oil falls and the price falls.

The strict corona policy of China, the world’s largest oil importer, also led to lower demand for oil in this country. China has now abandoned its strict corona policy, which means that Chinese oil demand is expected to increase again in 2023.

Recommended oil price

Motorists also noticed the unrest on the oil market at the pump. In June, the recommended retail price for petrol reached a record level of 2,504 euros. The recommended retail price for a liter of diesel reached a record value of almost 2.40 euros this year. It was noticeable that the price of petrol was significantly higher than in June 2008, when the price of crude oil hit a record high. The main reason for this was the expensive dollar. Oil is paid for in dollars, but petrol is paid for in euros at the pump.

Currently, the recommended retail price for a liter is 95 euros at 1,930 euros, according to data from the consumer collective UnitedConsumers. The recommended retail price for diesel is now 1,913 euros per liter. In practice, motorists on the Autobahn only pay the recommended retail prices. In October 2021, the target price for petrol exceeded 2.10 euros per liter for the first time.