Understanding the fuel price fluctuations
Fuel prices in Fiji are reviewed on a monthly basis. The prices in Fiji are dependent on three key variables factors: the freight rates, exchange rates and the world market price for refined oil (MOPS). All petroleum consumers were notified that the wholesale/retail prices for Motor Spirit, Premix, Kerosene and Diesel decreased for this month. The petroleum prices from 1 May to 31 May 2020 is mainly determined by the movement of refined oil prices in the Singapore market based on March 2020 average prices of the daily published Means of Platt’s Singapore (MOPS) benchmark prices. There was favourable movement in the international prices for Motor Spirit, Premix, Kerosene and Diesel. There was unfavourable movement in the international prices for Motor Spirit, Premix, Kerosene and Diesel since the last review period.
The ramifications of the COVID-19 pandemic were still the main driving force, resulting in unprecedented worldwide oil demand shock and massive sell-offs in the global oil markets, amid a significant crude surplus in March 2020 which contributed to significant uncertainty in crude oil markets and the world economy in general that had an impact on the local Fijian prices. Unfavourable movement in the international freight prices and the strengthening of the US dollar was also noted.
The resulting effect of movements has seen the following changes in fuel prices for May 2020 for the Fijian market (as in the table format).
Oil Price
The Fiji Competition and Consumer Commission noted that since January 2020, internationally the oil price declined following the effect of COVID-19 due to oversupply and reduction in demand due to lockdowns being implemented by the Governments of countries affected by the pandemic. The current price revisions are attributed to the international market influences. The May 2020 review period noted the fluctuation in the world petroleum prices for March 2020 in Fiji as Fiji follows a month lag period to implement the changes in world market price. The current prices when compared to the prices from the Year 2015 shows the following price changes (as in the table format).
LPG:
The review period (March 2020) noted decreases in the trading prices, however the US dollar strengthened against FJD and international freight rates increased resulting in the price decrease for all LPG products.
The resulting effect of movements has seen the following changes in LPG prices for the month of May 2020 for the Fijian market (as in the table format).
Overall, the monthly price of Butane decreased by 11.93 per cent for the month of March 2020 when compared with the previous review (USD545/tonne to USD480/tonne). It has been observed that the LPG prices fell since the butane CPs recorded the second month of consecutive decline due to coronavirus outbreak that continued to curb China’s domestic LPG consumption and import demand. China is the largest importer/buyer of the Middle Eastern LPG and the travel lockdowns for preventing spread of coronavirus has led to oversupply. Thus, prices have LPG prices dropped.
The strengthening of the USD against FJD and increase in freight and handling charges, however has unfavourable movement during March 2020, however the decline in butane price led to overall decline in the domestic LPG price.