Fuel Price Pulse – 28th March

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We share our insights into the factors impacting fuel prices, including predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices determine the price of petrol and diesel at the pump. They are influenced by a range of factors, including crude oil supply, demand, and pricing, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

 

Fuel prices this week:

Early this week, oil prices rose due to growing concerns over possible U.S. tariffs on Venezuela and a larger-than-expected drop in U.S. crude oil inventories. Both of these factors could influence supply, pushing prices up. Prices continued to rise on Friday, fueled by fears that U.S. trade tariffs could trigger a global recession. This is the third consecutive week of oil price increases.

US sanctions and inventories

Despite concerns over a potential recession, oil demand remains stable. US inventories fell by 4.6 million barrels in the week to March 21, exceeding expectations and signalling strong demand.

On Monday, President Trump signed an executive order authorising a blanket 25% tariff on imports from any country purchasing Venezuelan crude oil and liquid fuels. This led to immediate reactions in the market, with China – Venezuela’s largest buyer – halting oil purchases and India’s Reliance Industries – operator of the world’s biggest refining complex – also planning to stop Venezuelan oil imports.

Analysts predict tighter supply in the second quarter if Venezuelan and Iranian exports decline.

OPEC

Meanwhile, OPEC+ is set to gradually increase production in April, with further rises expected in May.

Geopolitics

Geopolitical factors are also adding volatility. Sanctions are driving prices higher, but ongoing discussions between the U.S., Russia, and Ukraine regarding hostilities and uncertainty about ceasefires in the Black Sea are creating counterpressure and market instability. Additionally, a stronger U.S. dollar has made crude more expensive for international buyers this week.

 

Supply, demand and other factors:

  • While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can slow demand and impact prices. 
  • Oil is traded in U.S. dollars, so dollar fluctuations impact oil prices. A stronger dollar and fluctuations in exchange rates make oil more expensive in other countries, potentially lowering demand. 
  • Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Please speak to our team for more information on fuel card pricing, including advice on how to save time and money on fuel management. 

 

The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting.