Fuel Sellers Don't Expect Quick Price Drop at Pumps
Major Estonian fuel sellers say that while a US-Iran peace deal should stabilize the market, a sharp drop in pump prices is not expected.
Although the planned peace agreement between the US and Iran is likely to stabilize the fuel market, a rapid and sharp drop in prices at gas stations is not expected, according to representatives of Estonia's largest fuel sellers. Companies Terminal and Alexela also cited the intense competition in the Estonian market, which has already kept prices low.
Tarmo Kärsna, head of business development at Alexela, said that while the agreement calms markets, the impact of the prolonged conflict on retail prices will be felt for a long time. Alan Vacht, a board member of Terminal, added that the expected peace deal is already affecting oil prices, but a fast and sharp decline is not in sight. He emphasized that the physical fuel market remains tight and normalization will take much longer than signing one agreement.
Indrek Sassi, head of motor fuel pricing at Circle K, pointed out that even if the peace treaty is signed, the fuel market needs time to return to normal. The Strait of Hormuz must be cleared of mines and regular shipping restored.
Kärsna also noted that when normal oil flows resume, replenishment of depleted reserves will begin, slowing price declines. The world has lived with deficits compensated by accumulated stocks for the past three months, and now those reserves must be replenished, keeping demand high.
Vacht and Kärsna highlighted that a price war that started in autumn has already lowered retail prices. In some places, fuel was sold below cost. As a result, Estonian consumers enjoy the lowest prices in the Baltics despite higher excise taxes. Vacht predicts that retail prices in Estonia may soon fall even below pre-war levels, while world market prices will take longer to reach the same level.
On Monday, June 15, oil prices fell to their lowest since March after US President Donald Trump and Iran's Deputy Foreign Minister announced a preliminary agreement to end the war and restore shipping in the Strait of Hormuz. Brent crude futures dropped 4.7% to $83.25 per barrel, and WTI fell 5.1% to $80.53.
