Rises in war, does not fall in truce: why gasoline and diesel prices take so long to fall at gas stations

Driver refuels at a gas station in Los Angeles, United States. Damian Dovarganes/AP Photo The unpredictability of the conflict between the United States and Iran has, once again, been reflected in oil prices. With another wave of attacks between the two countries and the resumption of the US naval blockade of Iran in the Strait of Hormuz — a route through which around 20% of global oil trade passes —, the commodity rose again in July, when a barrel of Brent, an international reference, closed at US$83.30. ?? Do you have any reporting suggestions? Send to g1 Even with the increase in prices, however, oil is still well below the peak recorded in April, when Brent reached the US$118.03 mark. This is because, despite the recent rise, the commodity went through a period of significant drop in prices, reaching close to US$70. In Brazil, however, this slowdown did not affect fuel prices at gas stations. Data from the National Petroleum, Natural Gas and Biofuels Agency (ANP) show that diesel and gasoline still accumulate increases of around 10% and 5%, respectively, since the start of the war in February. According to experts consulted by g1, the delay is the result of a combination of factors, such as uncertainty about the consequences of the conflict in the Middle East and the subsidy announced by the government, which helped to contain the rise in fuel prices — and should also limit the drop in prices here. "Unpredictability still dictates the prices of oil and, consequently, diesel and gasoline. There are still many sensitive points to be negotiated between the two countries", says StoneX market intelligence analyst, Bruno Cordeiro. See below the fuel situation in Brazil.

Still fragile truce keeps market on alert Despite the signing of a preliminary agreement in mid-June to end the conflict in the Middle East, the truce between the US and Iran has been broken more than once. Less than two weeks after signing the document, the two countries returned to exchanging missile and drone attacks and began accusing each other of violating the provisional ceasefire. After days of clashes, the US and Iran agreed to halt hostilities and resume negotiations. Qatar and Pakistan mediated a new round of negotiations between the two countries and, according to representatives, there was "positive progress" in the talks. In recent days, however, a new wave of attacks between the two countries has once again put the fragile agreement in check. In addition to the bombings and retaliations from both sides, Trump also resumed the US naval blockade of Iran in the Strait of Hormuz and threatened to charge a 20% toll on the cargo of all ships passing through the canal — but he backtracked and said he would replace the fee with "trade and investment agreements with the Gulf countries." In addition to the still limited traffic in the Strait of Hormuz increasing concerns about the world's oil supply, experts highlight that global demand remains high, also driven by the summer in the Northern Hemisphere, a period in which energy consumption usually reaches higher levels in the USA and Europe. "We are experiencing a historic drop in stocks. Both the OECD and the US have very low levels", says the chief economist at MB Associados, Sérgio Vale. "There is still a lot of uncertainty about what could happen. A concrete sign of the definitive end of the conflict would be necessary to begin removing mines from the region, rebuilding the destroyed ports and resuming operations. This takes time", he adds. Oil, inflation and stock markets: the economic damage left by the war between the USA and Iran Why gasoline and diesel remain expensive in Brazil According to experts, Brazil recorded a more moderate increase in fuel prices than that observed in the USA and European countries. To reduce the impact of rising fuel prices on inflation, the federal government allocated more than R$30 billion to containment measures. Petrobras also acted to contain prices at the most critical moments, avoiding immediately passing on the increases to consumers. "The increase did not reach the end consumer with such intensity. And, as the increase was more moderate, there is no room for very intense drops", says Sérgio Vale, from MB Associados. Recently, for example, Petrobras reduced the price of diesel in refineries by R$0.35 after the end of the subsidy funded by the government. As the drop only compensated for the end of the benefit, the prices charged to distributors remained unchanged. Furthermore, the government also postponed the decision on removing the gasoline subsidy, following the new escalation of the conflict in the Middle East. Experts also say that even increasing the mandatory blend of ethanol in gasoline, from 30% to 32%, should not be enough to cause a significant reduction in prices at gas stations. "This increase is important, but, in itself, it should not be reflected in a significant reduction in gasoline. The main factor that will determine the rise or fall in prices is the situation in the international market and the way in which this movement is transmitted to imported products that arrive at Brazilian ports", adds Cordeiro. What needs to happen for gasoline to fall in Brazil What needs to happen for gasoline to fall in Brazil. Art/g1

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