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The current drop is temporary, the expert stresses.
Director for economic programs of the Ukrainian Institute for the Future (UIF) Anatoliy Amelin says the rapid fall in prices of U.S. WTI oil and Russia's Urals crude oil on April 20 will have almost no effect on the Ukrainian market.
"The Ukrainian market for petroleum products is premium-type, with an informal cartel conspiracy of market players. Plunging oil prices will not significantly reduce the price of motor fuel. First, Ukrainian chains purchased petroleum products at a price of oil at about US$60, so they won't cut prices until they sell them out. They are lowering prices gradually, while purchasing cheaper oil as average weighted prices go down," he told the Ukrainian TSN TV news service said on April 21.
Secondly, the current fall is temporary, the expert stresses.
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"The collapse in prices is a consequence of storage facilities being full. The next step will be the bankruptcy of companies, particularly American ones, that produce shale oil. Russia will also reduce the number of operating wells. With the restoration of global economy, which will take place once quarantine restrictions are lifted in May-June, demand for oil, as well as prices, will start growing. So, the current drop [in prices] is temporary and short-term. Ukrainians will hardly feel it," he said,
American WTI oil sharply slumped in price: first, to US$1, then to zero. Following that, the price became negative, and then it rebound to US$0.22-US$0.35 per barrel. After that, the London Exchange ICE saw a sharp collapse in oil prices by more than 300%, with prices hitting negative US$40 per barrel.
This refers to price of WTI oil for May. Almost no one needs oil now. Demand for raw materials declined sharply worldwide after the introduction of quarantine measures to prevent the spread of the novel coronavirus.
At the same time, oil prices for June deliveries are above US$20 per barrel.