Diesel prices in Ukraine are expected to rise above 100 hryvnia per litre and approach 105 hryvnia as early as next week, according to Dmytro Lyoushkin, founder of the Prime group, who spoke to the news agency UNIAN.
Lyoushkin said the objective price for diesel was likely to sit somewhere between 107 and 108 hryvnia per litre, though the increase would not happen immediately because batches of fuel purchased earlier were still entering the market. He described 105 hryvnia per litre as the obvious near-term outcome.
He forecast that diesel could climb to 101-102 hryvnia per litre within the coming days, before reaching the 105 hryvnia mark next week.
Petrol prices also rising
Lyoushkin said petrol prices would also increase, though more slowly than diesel, lagging behind it by around 5 to 7 hryvnia. He compared petrol's movement to a thread trailing behind a needle, following diesel's rise. He said petrol would approach the psychological threshold of 100 hryvnia per litre but should not cross it in the near term, instead settling just under that level.
Three factors pressuring the market
Lyoushkin identified three key factors currently pushing up fuel prices: the situation around the Strait of Hormuz, risks in the area of the Bab-el-Mandeb Strait, and a reduction in the availability of Russian diesel caused by Ukrainian strikes on Russia's oil refining infrastructure.
The Strait of Hormuz, which lies between Iran and Oman, is one of the world's most important oil shipping routes. Lyoushkin said the passage of tankers through the strait had improved somewhat, with vessels now passing through it, in some cases escorted by American warships. However, he said Houthi attacks had knocked out two pumping stations on Saudi Arabia's East-West pipeline, which had partly offset disruptions to supply through Hormuz.
The Bab-el-Mandeb Strait, between Yemen and the Horn of Africa, links the Red Sea to the Gulf of Aden and has faced repeated attacks on shipping by Yemen's Houthi movement. Lyoushkin said there were currently no critical problems there, since the Houthis were not blocking shipping and had said they did not intend to do so.
He said Ukrainian strikes on Russian oil refineries and other oil infrastructure were reducing the availability of Russian diesel on the market by damaging Russia's refining capacity.
Prices already climbing
Average fuel prices in Ukraine rose significantly on 14 September. The average price of premium A-95 petrol increased by 1.46 hryvnia to 88.88 hryvnia per litre, while diesel prices rose by 1.31 hryvnia over the same 24-hour period.
On 11 September, diesel prices in the United States exceeded $6 a gallon, equivalent to 70.6 hryvnia per litre, for the first time in history. It was reported at the time that the rise in diesel prices could increase the risk of further inflation ahead of the seasonal peak in fuel demand.
