Bi-weekly recalculation of retail prices for petrol products in Croatia due to formula used would lead to strong increases of retail prices. Therefore, the Government has decided to intervene by changing the already existing regulation and by putting the cap on retail price on all gas stations except on highway ones. The new cap fixes Euro-Super 95 fuel price to HRK 13.5 (EUR 1.79) per liter, where it approximately was in the last two weeks.

Despite the fact that oil prices on global markets (Brent) decreased in the last two weeks (-6%), premium unleaded spot fuel prices on European refined oil product markets have increased. Bi-weekly recalculation of retail prices for petrol products in Croatia due to formula used would lead to strong increases of retail prices. Therefore, the Government has decided to intervene by changing the already existing regulation and by putting the cap on retail price on all gas stations except on highway ones.

As a reminder, in Croatia from 7 June Regulation On Determination Of The Highest Retail Prices Of Petroleum Products is valid where prices are recalculated bi-weekly according to formula that adds retailer’s premium to ”Basic price of fossil fuel in the accounting period (t) in HRK / liter rounded to three decimal places”. This basic prices is calculated by weighting the mid-daily averages of Premium Unleaded 10 ppm fuel spot prices on Mediterranean ports according to provider Platt’s. In this Regulation retailer’s premium was decreased to HRK 0.65 per liter for motor and diesel fuels. When new prices would be recalculated without Government intervention new price for Euro-super 95 valid from today would amount to HRK 15.95 per liter (EUR 2.11 per liter). By putting a price cap on retail price of petrol sold, the Government is directly influencing retailer margin as they have already purchased gasoline that they will be selling on petrol stations. As Government is putting cap only on petrol stations that are not located on highways, retailers still have some room for higher margins.

The new decision will be in force for the next two weeks, and is valid from today, while Government states that new decisions will be made depending on the market situation. The Government still has room to intervene if new fuel price increases occur, either by decreasing further excise tax, either by decreeing retailer margins or simply by putting the cap on retail prices. To look further on our take on global oil and retail prices read our blog.