Russia’s gasoline prices not to drop despite slumping oil prices
Russia's gasoline prices will not drop after the oil price slide, but their increase is also unlikely, Deputy Finance Minister Alexei Sazanov said.
"I do not think that the gasoline prices will fall but they must not grow as well, this is for sure," RIA Novosti cited the deputy minister as saying.
The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking to Vestnik Kavkaza, noted that changes in oil prices have almost no effect on gasoline, since its price is determined by other factors.
"In our gasoline price, the crude oil price share is 9-11%, depending on whether it is gasoline or diesel fuel. All other money in the price is payment for the services of oil producing and oil refining companies, but most importantly, more than 60% are taxes," he explained.
"Until Russia is able replenish the budget at the expense of other economic sectors, gasoline prices will not decrease," Valery Bessel noted, adding that in the foreseeable future gas prices will only increase.
On Monday, the price of futures contracts of Brent crude oil for May 2020 delivery plunged by over 30% on London's ICE, with the lowest level reached being $31.02 per barrel. On Tuesday, the price of Brent futures contracts has narrowed losses adding 4.7% to $36.02 per barrel as of 12:20 am Moscow time, while the price of futures contracts of WTI crude oil gained 5% to $32.7 per barrel.
The oil price fell amid the news that OPEC+ countries failed to agree on an additional reduction in oil production amid sliding demand due to the coronavirus in Vienna. OPEC proposed to deepen production cuts by another 1.5 mln barrels per day until the end of this year. However, Russia and Kazakhstan opposed the proposal.
Russia’s Energy Minister Alexander Novak expects oil prices to recover after Monday’s crash within several months.