Source: Fuel prices fall as Middle East tensions ease – herald
Rutendo Nyeve-Victoria Falls Bureau
GOVERNMENT has started adjusting fuel prices downwards, with petrol and diesel now selling below US$2 per litre following the easing of hostilities in the Middle East.
Iran and the United States, which have been fighting since February 28 this year, signed an agreement on Thursday to end the war that had resulted in the closure of the Strait of Hormuz through which 20 percent of the world’s fuel is transported, triggering an increase in prices.
Addressing delegates at the Annual Chamber of Mines Conference yesterday, Energy and Power Development Minister July Moyo said the Government was actively reviewing pump prices in line with favourable developments on the international market while maintaining its commitment to ensuring uninterrupted fuel supplies.
“In the petroleum sector, you have seen what we have been doing. We increased prices when we were hit by the Straits of Hormuz; we were very hard hit here in Zimbabwe,” he said.
“When you look at the percentages, what we increased from where we were is the same as what everybody else increased, but we already had a petroleum product which was higher than normal, and we have maintained that we need security of supply,” he said.
Minister Moyo said following the Middle East conflict, President Mnangagwa directed the ministry to prioritise security of supply.
“We don’t want any queues anymore after the President eliminated them. But there is the cost side of things that we are tracking, and we hope that we can decrease,” he said.
“You will see that this week, we are now below US$2, and we think the reviews that we are doing will lead us to where we need to go.”
Minister Moyo said the Government would continue monitoring international market developments closely to ensure Zimbabweans benefit from the ongoing stability in global oil markets.
The Strait of Hormuz, a strategic shipping route through which about a fifth of the world’s oil supplies pass, had become a flashpoint during heightened tensions in the Middle East, triggering supply concerns and sharp increases in global crude oil prices.
The disruptions pushed Brent crude prices to above US$100 per barrel, driving Zimbabwe’s fuel prices to a peak of about US$2,23 per litre for petrol and placing additional pressure on households and businesses.
Throughout the period of uncertainty, Government maintained that safeguarding fuel availability remained its top priority, introducing market-sensitive pricing measures while ensuring the country retained fuel reserves sufficient for more than three months.
Authorities also implemented tax relief measures and increased fuel blending ratios from E5 to E20 as part of efforts to cushion consumers and stabilise pump prices.
Recent trends, however, indicate a reversal of the earlier price surge, with global oil prices retreating significantly as supply chains normalise following the reopening of the Strait of Hormuz.
Fuel industry players have welcomed the downward price adjustments, saying they will ease pressure on businesses and consumers alike.
“As fuel industry players, we welcome the cushioning of fuel users which was extended by the Government when the Strait of Hormuz was closed,” said fuel industry player Mr McKenzie Dongo.
He said following the current developments regarding its reopening, they expect to see a significant reduction in pump prices in the next Zimbabwe Energy Regulatory Authority (Zera) price review as international oil prices have fallen below US$86 per barrel.
“Prices eased during the last Zera review but remained above the US$2 mark. With this week’s international market reduction and stabilisation, we expect both petrol and diesel to fall further below the US$2 benchmark,” said Dongo
“For us as industry players, it eases pressure on working capital requirements, which had been seriously strained because of the earlier supply-induced increases.”
Zera is expected to announce its next official fuel price review in the coming days, with industry players anticipating further reductions.
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