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Oil is traded and bought in US dollars. And if the rise in the price of a barrel inevitably increases the final score for gasoline or diesel, the euro/dollar parity adds to the pain. Thus, “brent” (the oil from the North Sea which is the benchmark in Europe) is quoted tonight at 99.89 USD per barrel. 100 dollars which therefore represents 100 € to date.
If we had kept the value of the euro from a year ago, the barrel in euros would be at just over 83 euros. A difference that ultimately affects the price of fuel. Instead of being at 2.20 €/l (without the discount of 18 cents from the State) we would have fuel at 2 €/l or around 1.80 with the discount.
Paying oil in dollars weighs heavily
Obviously, this is in addition to the passage of the barrel of brent from 70 dollars at the beginning of 2022 to 120, then now 100 dollars. +30 dollars and a euro/dollar parity, more than enough to make our fuels exceed 2.15 €/l. We add to this minimum stocks and we arrive at variations of more than 10 centimes per liter from one week to another.
As a result, in addition to a fall in the barrel, it will therefore be necessary to strengthen the euro against the dollar to see prices at the pump return to pre-crisis and pre-war levels in Ukraine. Not necessarily tomorrow the day before with the United States which seems to once again become one of the world’s engines of growth while Europe is slipping in cyclical inflation.
The euro/dollar parity is historic. Since its introduction in 2002, the euro has always stood above the dollar. This is typically due to a more aggressive monetary policy of the USA than of Europe to fight against inflation. In addition, the prospect of winter is weighing on European confidence with possible restrictions and energy shortages (gas in particular). Commodity prices are also driving investors away from the euro. They turn to the dollar.
The European currency has been plummeting for a year against the king dollar. With this drop of nearly 17% since the summer of 2021, this inevitably affects the price of fuels since oil is purchased in dollars and not in euros. The weakness of our currency penalizes us at the pump.