Domestic fuel prices could fall next week following Iran deal
Gasoline and diesel prices in Taiwan are likely to fall next week after a preliminary nuclear agreement reached by the U.S.led six nations and Iran overnight pushed down international crude oil prices, market sources said Friday.
Based on a floating pricing mechanism used by state-owned oil supplier CPC Corp. ( ), domestic fuel prices may fall by NT$0.1 (US$0.003) to NT$0.2 per liter next week, after a rise this week, the sources said.
CPC adjusts domestic fuel prices on a weekly basis based on a weighted oil price formula consisting of 70 percent Dubai crude and 30 percent Brent crude.
The expectations of a fall in domestic fuel prices came after the six powers led by the U.S. and Iran reached an agreement under which the two sides will start a process to draft a final deal to limit Iran’s nuclear weapon program.
Thursday’s agreement could pave the way to lifting sanctions on crude oil exports from Iran, causing international crude oil prices to tumble. The deadline for a final deal is set for June 30.
Brent crude, the global crudeoil benchmark, fell US$2.15, or 3.8 percent, to US$54.95 a barrel on ICE Futures Europe overnight, while crude prices on the New York Mercantile Exchange fell US$0.95, or 1.9 percent, to US$49.14 a barrel.
The price of a barrel of crude oil under the CPC’s weekly floating price formula was US$53.72 on April 2, down from US$54.41 the previous week, according to CPC’s website.
If the price hike is implemented as expected, prices at the pump will fall to NT$22 or NT$22.1 per liter for super diesel, NT$24 or NT$24.1 per liter for 92 octane unleaded gasoline, NT$25.5 or NT$25.6 per liter for 95 octane unleaded gasoline and NT$27.5 or NT$27.6 per liter for 98 octane unleaded gasoline.
CPC is scheduled to announce the fuel price adjustments at noon Sunday.
Despite the optimism stemming from the tentative agreement between the U. S.- led coalition and Iran, CPC cautioned that it was still too early to say whether the progress in the nuclear talks will have a substantial impact on global oil supplies any time soon.
The company doubted the deal would have any impact on crude oil supplies until the end of June, the deadline for a final deal to limit Iran’s nuclear weapons development, or even by September.
Under sanctions imposed by the West, crude oil exports from Iran have fallen by 1 million barrels a day from the 2.5 million-3 million barrels exported per day previously, CPC said.
CPC said that even if the final deal is struck, the West may decide to lift the sanctions only gradually, which would effectively limit the deal’s effect on global supplies.