Oil surges as Polish petrol nears 8 zlotys and diesel approaches 9 zlotys per liter

Oil prices surged on Monday as the conflict between the United States and Iran escalated around the Strait of Hormuz, raising the prospect of another sharp increase in fuel prices in Poland. Brent crude, extracted beneath the North Sea, came close to $98 a barrel, approaching its late-July local high of more than $100. U.S. West Texas Intermediate crude neared $93, its highest level since early June.

The latest move followed one of the most serious exchanges of fire in the area in months. The U.S. military attacked Iranian tankers over the weekend, and Iran responded by launching ballistic missiles toward U.S. warships.

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There is currently a lot of worrying information in the oil market about the situation in the Persian Gulf and the Strait of Hormuz, led by reports of tankers being shelled, which drastically increases the risk for companies wanting to transport crude from the region.

Analysts warned that Brent could break through the $100 barrier this week. “There is currently a lot of worrying information in the oil market about the situation in the Persian Gulf and the Strait of Hormuz, led by reports of tankers being shelled, which drastically increases the risk for companies wanting to transport crude from the region,” said Jakub Bogucki, an analyst at e-petrol.pl. He said shipping traffic was falling because companies did not want to assume the danger.

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The movement of ships is decreasing, and it is therefore very likely that the price of oil will break through the $100 per barrel barrier later this week.

Higher crude prices are already feeding through to Polish filling stations. E-petrol.pl data showed that diesel averaged 8.39 zlotys per liter last week, while Pb95 petrol reached 7.63 zlotys. Those prices rose 11.7% and 16.1%, respectively. Bogucki estimated that diesel could average about 8.80 zlotys this week and Pb95 could reach 8 zlotys.

Autogas, which cost 2.89 zlotys last week, may also become more expensive. Wholesale prices have already risen, Bogucki said, although he expects a slower increase than for diesel and petrol, with LPG gradually approaching 3 zlotys in the coming weeks. Reflex senior fuel-market analyst Urszula Cieślak said Polish pump prices reflected both international market conditions and domestic factors, including the expiry of a government CPN program and increases in petrol and diesel prices.

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Wholesale LPG prices are already rising, so they will probably soon be visible at fuel stations as well.