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Oil prices rose steadily throughout the summer. One barrel (159 liters) of the European Brent variety is now 27 francs more expensive than in June. The huge increase also affected gasoline prices. Diesel in particular costs more than two francs per litre. Another effect fueling inflation in Switzerland.
So why this price increase? According to UBS raw materials analyst Giovanni Staunovo, there are two main reasons for this: “On the one hand, we have a very strong demand, and on the other hand, the supply has become scarce,” he said in an interview with the AWP news agency.
Tight supply is a result of production cuts. The Organization of Petroleum Exporting Countries (OPEC+) recently decided to cut production to increase prices. Saudi Energy Minister Prince Abdulaziz bin Salman recently emphasized that the organization does not want to change the outages at this time.
It gets more expensive at the pump
The increase in prices is now felt not only in crude oil but also in gas stations. Looking at the TCS website, in many places customers again have to pay more than two francs per liter of gasoline. This is despite the fact that the price of crude oil is just one of many factors that affect the price of gasoline for end customers.
According to UBS expert Staunovo, there are several reasons why not only the price of crude oil but also the price of gasoline is increasing. One of these is the problems related to the processing of crude oil in refineries. He said there were malfunctions in important refineries. Some types of high-quality crude oil are less available than they currently are.
The high demand for both refined gasoline and crude oil is due to the fact that there has been no major economic turmoil so far, despite significant interest rate hikes by major central banks. “The economy is still growing, it needs oil, and this is driving up prices,” Ramon Werner, managing director of Swiss oil trader Oel-Pool, told “SRF”.
Oil price affects inflation
Looking ahead, neither the price of crude oil nor the price of gasoline is likely to drop anytime soon. He expects the cost of a barrel of Brent to still be around $95 at the end of the year Staunovo told AWP. This is not a further increase, but a high level of horizontal movement.
This is not good news for consumers. “The high oil price is, of course, a factor that tends to have a positive impact on inflation,” Staunovo said. This rate, currently 1.6 percent, is no longer very high in Switzerland. As announced yesterday, the Swiss National Bank (SNB) is now suspending interest rates.
However, monetary authorities warned that from today’s perspective, it cannot be ruled out that further tightening of monetary policy is necessary to ensure price stability in the medium term. Therefore, the SNB will closely monitor the development of inflation in the coming months. High oil prices could also play a significant role in increasing prices here, according to Staunovo. (SDA/wgr)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
