Star Petroleum predicts global oil price drop despite high energy demand

Star Petroleum Refining Plc predicts a decrease in global oil prices for the remainder of the year despite robust energy demand. The reduction in prices is anticipated due to a potential surplus among key oil producers, according to Sakchai Thamsuruk, the manager for supply and planning at the petroleum company.

The global oil industry is closely observing Saudi Arabia and Russia’s decision on whether to cut crude oil supply by 1.3 million barrels daily. Should they opt against this, a surplus would flood the global market. Despite the traditionally high oil demand during winter for heating purposes, Thamsuruk believes this year’s demand will not surpass supply.

Geopolitical tensions, such as the Israel-Hamas conflict, while not in the vicinity of major oil sources, could disrupt oil transportation near the contentious Gaza area. Additionally, the economic conditions of powerhouse nations such as the US and China are under scrutiny as they could influence global oil demand in the year’s final months. These uncertainties may cause oil price fluctuations, warns Thamsuruk.

In the global refined oil market, jet fuel demand is roughly 80% of pre-pandemic 2019 volumes. Diesel demand is predicted to rise in Western countries during the winter. Despite a decrease in gasoline exports from China, Thamsuruk believes gasoline supply will remain stable as driving activities typically reduce during winter.

In Thailand, prices of gasohol 91 and gasohol 95 have seen a decrease four times since November 1, dropping from 37.98 and 38.25 baht per litre to 34.48 and 36.25 baht per litre respectively within ten days, as reported by the Energy Policy and Planning Office. This is partly due to the state’s policy to reduce gasohol prices, a blend of gasoline and ethanol, which was implemented on November 7 and is set to continue until January 31, 2024.

To keep diesel prices below 30 baht per litre and cap liquefied petroleum gas (LPG) at 25.87 baht per kilogramme, the government is using money from the Oil Fuel Fund to subsidise LPG by 7.34 baht per kilogramme and diesel by 2.76 baht per litre. This is in contrast to the market price of 33.21 baht per kilogramme for LPG.