Gas stations in Germany are important price indicators: anyone who regularly goes to the pump can know the price of oil. It's just going up again. But gold and copper are also rising.
The 159 liter barrel is once again causing a stir. It refers to the barrel of oil, which is commonly used as a unit of measurement in the global crude oil market. While at the beginning of the year the price of a barrel of North Sea Brent oil was just over $70, it is now approaching $90, an increase of more than 20 percent. Millions of drivers are also feeling the increase in prices at the gas station. Gasoline prices have increased by about 10 cents per liter since the beginning of the year, and the trend is upwards.
There is a lot going on at the moment, explains Carsten Frisch, commodities analyst at Commerzbank: “The rise in the price of crude oil is due to a mix of economic optimism, oil supply shortages and current tensions in the Middle East.”
Two wars boost oil prices
Events in the Middle East in particular have contributed to rising oil prices. More recently, for example, seven members of the Iranian Revolutionary Guard were killed in an alleged Israeli attack on the Iranian embassy in Syria. Incidents like these show how quickly the conflict in the region could escalate and therefore fuel concerns about oil supplies. This worries market participants. “Lately there has been an increase in Ukrainian drone attacks against oil refineries in Russia,” adds Carsten Fritsch.
Linda Yu of DZ-Bank also sees geopolitical tensions as one of the main factors in the development of crude oil prices: “In addition, the currently still weak demand and the weak economy in China and Europe should recover,” she said. the raw materials analyst. in an interview with DW. The prospect of a global economic boom and the resulting growing demand for oil is driving up the price of black gold.
Copper and gold glitter.
Overall, commodity prices, including copper and gold, have recently increased across the board. For example, the price of a troy ounce of gold recently rose to more than $2,300, an all-time high. According to Carsten Fritsch of Commerzbank, one can currently even speak of a “commodity rebound”. The reasons for rising prices, from oil to gold, are all similar: “They are mostly signs of growing demand, coupled with news of limited supply.”
The price of the important industrial metal copper is currently boosted by speculation surrounding an interest rate cut by the US Federal Reserve. This, in turn, weakens the US dollar and makes commodities premiums traded in dollars, such as copper, are cheaper for investors in other currency areas, which increases demand and, therefore, the price.
However, when it comes to gold, which is often a safe haven for investors in crisis situations, investors and market watchers wonder why the price is rising. Some people also suspect a connection to the expected interest rate cut. However, the World Gold Council also highlights the current strong interest of several central banks. They recently continued their gold purchases “at the highest level.” The central banks of China are mentioned, but also of Poland, the Czech Republic, India, Singapore and Libya. The same thing happens here: higher demand drives the price.
OPEC: No production restrictions planned
In the case of oil, there is a special supply-limiting factor: OPEC. The Organization of the Petroleum Exporting Countries restricted production a few months ago. In the middle of this week it announced that it would not make any changes to this financing policy. This is also likely to help keep global markets tense over the coming months and possibly drive up the price of crude oil further. In addition, according to the Bloomberg news agency, Iraq produced more oil than agreed in March and Russian crude exports also increased. Linda Yu of DZ-Bank expects the oil price to continue rising throughout the year to reach $95 per barrel.
This news about the 159-liter barrel is not good for drivers, at least not for those who use a car with a combustion engine. The evolution of oil prices has a directly perceptible impact on gas stations. Since gasoline and diesel prices are closely correlated with crude oil prices, rising oil prices lead to higher fuel prices. Therefore, consumers have to dig deeper into their pockets if they want to refuel their combustion car. This is also indicated by a current assessment by the ADAC automobile club on the development of fuel prices in March. Thus, the price of a liter of Super E10 has been rising for three consecutive weeks and the monthly average stands at 1,787 euros.
The price of diesel, on the other hand, barely changed. According to ADAC, the fact that diesel is less affected by price increases is probably due to the approaching end of the heating season, which will lead to a drop in demand for heating oil, which is very similar to diesel. .
Author: Gregorio Lischka