A drop in fuel prices may be on the horizon for drivers in France following the announcement of a temporary reopening of the Strait of Hormuz.
The strait, closed to most traffic for more than a month following the outbreak of conflict between the US/Israel and Iran at the end of February, will be fully opened for two weeks as part of a ceasefire deal.
Service stations across France are still facing shortages, and average diesel prices reached a record high of €2.375 per litre this morning according to calculations from the AFP.
This is 65c per litre higher than on February 27, the day before the conflict, and nearly 15c higher than a figure of €2.23 per litre posted on
Monday this week (April 6) by the fuel comparison site,
GlobalPetrolPrices.com.
Below, we show the main points from today (April 8).
Petrol remains capped at €1.99 per litre, with diesel at €2.25 per litre at all TotalEnergies service stations in mainland France until April 30.
Previously, diesel was capped at €2.09 per litre.
Diesel shortages continue across France
Service stations are continuing to report shortages in France, with some 16% announcing they were out of diesel yesterday, government figures show.
Departmental figures differ significantly however, with Paris in particular seeing double the number of stations facing a lack of fuel.
The map below shows diesel outages as of 12:30 on Tuesday (April 7).
Note that 17.2% of stations were reporting shortages on Monday, pointing towards an improvement.
The government said on Tuesday that shortages were largely a logistical issue based on an extended break from resupply efforts due to the Easter Monday public holiday, as well as strain on the TotalEnergies network due to its fuel cap.
Resupply efforts this week should see shortages drop.
Ceasefire hints at fuel price drop…
Prices are expected to fall in the coming days – potentially even lower than the TotalEnergies cap – due to the reopening of the Strait of Hormuz.
The strait, through which around one-fifth of global crude oil supplies are transported, has been closed to most traffic during the conflict.
Announcements that it has reopened have seen crude oil prices drop to around $93 -$95 per barrel – still above pre-war levels but far below the $100 threshold crossed several times since the end of February.
Oil stocks are up, or set to open higher, in several markets, indicating increased confidence in the recovery of global supply chains.
The drop in crude oil price will lead to lower costs for refineries, which in theory should make its way to consumers through lower prices when service stations next replenish supplies.
President of France’s petrol industry federation UFIP (Union française des industries pétrolières ) Olivier Gantois said prices would drop by 5c - 10c per litre in the coming days, if oil prices stayed at current levels.
Head of the ‘Coopérative U’ service station and supermarket group Dominique Schelcher said prices may fall within 48 hours, depending on market conditions.
French Prime Minister Sébastien Lecornu said the government "will ensure" prices drop at the pump, without detailing explicitly how it will do so.
La trêve de 15 jours annoncée entre les États-Unis et l’Iran pourrait rouvrir le détroit d’Ormuz. Cette avancée diplomatique a de premiers effets sur le prix du pétrole.
Quand les prix mondiaux baissent, les prix à la pompe doivent baisser, aussi vite qu'ils sont montés. Le…
However, despite fuel prices being quick to increase during a crisis, ensuing drops are historically slower to come, which may see prices remain at current levels for a while longer.
Oil tanker operators are also cautioning that the re-opening of the strait will not result in an immediate inflow of oil to the global supply chain.
Shipping analyst Lars Jensen told BBC Radio 4 that “nothing has really changed yet,” in the strait, and “it will take time” for traffic to increase.
Concerns over a sudden breakdown of the ceasefire may make tankers hesitant to initially cross the strait, with many companies only making limited journeys and using only a fraction of their available vessels to minimise risks.
With the ceasefire limited to two weeks, and uncertainty over the long-term future of the strait following this, oil shipments may do little more than replenish stocks before the corridor is closed once more.
On top of this, energy infrastructure damaged during the conflict will need to be repaired to bring global supply back to pre-war levels.
