Fuel prices are set to move sharply higher next week with 92 octane unleaded gasoline expected to hit almost NT$30 (US$1.08) on the back of rising international crude oil prices amid concerns over geopolitical tensions between Ukraine and Russia, sources said Friday.
The hike in crude prices on the global market is expected to lead CPC Corp., Taiwan, the sole state oil supplier in the country, to raise its gasoline and diesel prices sharply next week, by NT$1.2 and NT$1.4 per liter, respectively.
If CPC adjusts fuel prices as forecast, prices at its pumps will increase to NT$27.4 per liter for super diesel, NT$29.9 per liter for 92 octane unleaded gasoline, NT$31.4 per liter for 95 octane unleaded and NT$33.4 per liter for 98 unleaded, the sources said.
Rising crude prices
The global oil market has seen volatility in recent sessions as fears over the potential for conflict between Russia and Ukraine continues to grow. In addition, strong global demand for energy in the wake of an economic recovery has also pushed up crude prices.
In a recent research note, J.P. Morgan forecast crude prices could “easily” soar to US$120 per barrel as tensions between Russia and Ukraine escalate.
On Thursday, March futures for Brent crude in London, the global benchmark, stood at US$91.41 per barrel, while West Texas Intermediate (WTI) in New York closed at NT$89.88 per barrel.
CPC fuel pricing rules
CPC calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.
Based on fluctuations in international crude oil prices, CPC calculates the average price of crude oil at US$92.3 per barrel as of Thursday, an increase of US$2.09 from a week earlier, according to its website.
In addition, the Taiwan dollar depreciated by NT$0.074 against the U.S. dollar from a week earlier.
By taking into account these factors, the hike by CPC could be as high as NT$1.7 per liter for gasoline and NT$3.3 for super diesel next week.
However, to meet the government’s requirement to keep local fuel prices lower than in neighboring countries and areas such as South Korea, Hong Kong, Singapore and Japan, the state-owned company is expected to absorb part of the impact resulting from rising international crude prices. This will result in a likely increase in diesel and gasoline prices of NT$1.2 and NT$1.4 per liter, the sources said.
CPC and its rival Formosa Petrochemical Corp. are scheduled to announce their price changes on Sunday.
Source: Focus Taiwan News Channel