With the embargo of oil imports from Russia by the EU finally agreed upon, oil prices have already recorded an increase. In this brief overview, we look at how the new Croatian Govt. regulation will help end users cope with these increases.
As 2022 was already a turbulent year for the oil prices, with the Russian invasion, the subsequent sanctions, and the embargo on imports of oil from Russia by the EU, the prices of oil grew significantly, reaching a YTD growth of 53%, and currently standing at 118.9 USD/bbl. As a point of comparison, this is a growth of 66% compared to the 10y average, and 83% compared to the 5y average.
Brent oil prices (2010 – today, USD/bbl)
Because of these increases, over the last several months, we have seen a domino effect of increasing petrol prices, almost on a weekly basis. To help end users cope with these increases, the Croatian Government has up to now introduced several new measures. From 7 Feb till 6 Mar the measure that set maximum retail price was in place. From 7 March until yesterday the measure where the maximum margin permitted margin was set at HRK 0.75/l for Euro super and Euro diesel. The new measure that is in place from today also keeps maximum margin, while the Government has decided to decrease the excise duties on several petrol types, thus driving the prices down. According to the new regulation, the maximum margin permitted was set at HRK 0.65/l for Euro super and Euro diesel, while excise duties will be reduced by HRK 0.8/l for petrol, while diesel prices were reduced by HRK 0.4/l. According to the Government, without their measures, the price of petrol would be HRK 15.78/l, an increase of 16.9% compared to the HRK 13.5/l that will be upheld after the new measure comes into effect. The same story can be seen with diesel prices, with the price lowered by 20.1% (from HRK 15.8/l to HRK 13.08/l) by the government’s measures.
However, according to Petrol, one of the largest distributors of oil & gas products in Croatia (besides Ina), this might not be enough, as this does not affect the main issue: the lack of supply. According to the company, a better way would be to subsidize the fuel prices, and instead of the proposed 14-day revisions to pricing, a weekly revision would be required.
A similar situation is experienced in Slovenia, as the maximum permitted price for petrol is limited to EUR 1.56/l, while for diesel, the maximum permitted price is EUR 1.668/l. This regulation is valid until 10 Aug, while Slovenia is also setting a maximum wholesale price. Out of regional countries, B&H and Montenegro are also regulating prices by setting a maximum margin, while Serbia is putting a price cap on the retail price and it is changing it on weekly basis. With the current situation posing a lot of issues when it comes to the supply of oil in general, solving this problem will require more involvement from the governments.