Star Petroleum Refining Plc, a leading name in the petroleum industry, has made a daring projection about the future of global oil prices. Despite the world’s hearty appetite for energy continuing unabated, the refining company envisages a decline in oil prices by the end of this year. The main disruptor? A looming oversupply from chief oil manufacturers, says Sakchai Thamsuruk, the company’s esteemed manager of supply and planning.
The global oil ecosystem has its eyes trained on Saudi Arabia and Russia, two dominant players in the oil scene. These countries are rumored to be thinking about reducing their daily crude oil output by 1.3 million barrels. A decision not to cut supply would flood the market with more oil than it can consume. Though winter’s arrival usually accelerates oil consumption for heating, Thamsuruk opines that 2022 might present an anomaly, with supply overtaking demand.
Meanwhile, mounting geopolitical tensions in the global sphere, such as the enduring Israel-Hamas conflict, can add an unpredictable twist to the oil narrative. Although these conflicts aren’t brewing near major oil sources, they have the potential to wreak havoc on oil transportation around the inflamed Gaza area. Additionally, the economic health of heavy-hitting nations like the US and China is under the microscope. Fluctuations in their conditions could shift global oil demand in surprising ways as the year wanes, Thamsuruk cautions.
Jet fuel demand in the global refined oil market hasn’t recovered from the pandemic, hovering around 80% of the 2019 pre-crisis level. However, diesel demand is primed to spike in Western countries with the onset of winter. Although China has curtailed its gasoline exports, Thamsuruk is confident that gasoline supply can meet the reduced vehicular activities typical of winter.
In a surprising turn of events, Thailand has seen gasohol 91 and gasohol 95 prices shrink four times since the start of November. From costing 37.98 and 38.25 baht per litre respectively, the prices for these fuels fell to 34.48 and 36.25 baht per litre within a mere ten-day stretch, as revealed by the Energy Policy and Planning Office. This drop can be traced back to the state’s desire to cut gasohol prices – a concoction of gasoline and ethanol. The price reduction initiative began on November 7 and will be active until January 31, 2024.
In a bid to sustain diesel prices below the 30 baht per litre mark and cap liquefied petroleum gas (LPG) prices at 25.87 baht per kilogramme, the Thai government is dipping into the Oil Fuel Fund to subsidise these fuels. LPG and diesel will enjoy subsidies of 7.34 baht per kilogramme and 2.76 baht per litre respectively, a stark contrast to LPG’s market price of 33.21 baht per kilogramme.
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