Fuel prices have fallen slightly for two weeks, but are still far from pre-war numbers. Diesel is down 2% compared to 2022when it rose to 22%, which puts it at March 2022 levels despite the EU’s veto on Russian imports.
In addition to this fact, there is a circumstance which, until not so long ago, was the usual tendency: Diesel is cheaper than petrol again. On average, petrol is paid at 1,644 while diesel is paid at 1,618.
Although there are many reasons why things are back to normal, there are basically three reasons why.
The states are ready
On February 5, new sanctions against Russia entered into force, which, among other things, indicated that the European Union stopped buying refined petroleum products. Unlike at the beginning of the war, the sector is covered this time around, since February 5 is the deadline: Since the summer we already knew what was going to happen.
Being a well-known fact, all countries manage to cover their reserves well: there is much less dependence on Russia now than a year ago.
Warm winter feature
Except for a few days, this winter is going on Exceptionally warm. After a record high in 2022 in terms of temperatures, in the two months at the beginning of 2023, very high numbers for mercury were not reached.
With inventories full and Europe not in desperate need of heating to the limit, diesel demand has been much lower than expected. Now that spring and summer are here, these details will be even more important.
Entering China and India
Even though Russian oil has become a junk in Europe, that doesn’t mean Putin isn’t dumping it in other markets. This is the case of China and, above all, of India. Without Europe, the two Asian countries have become the main buyers, who use their refineries not only to hold what they need, but also to negotiate.
Therefore, Europe still enjoys a certain supply of Russian oil, but not directly, but from these countries. This, coupled with the fact that the US has not cut its production, means that oil producers are forced to lower the price of diesel (although not by as much in pre-war dates) until it is lower than gasoline.