Regarding the reasons behind the rising fuel prices and how long this trend will last, here is an overview by journalist RBK-Ukraine Alik Sakhn. This information is reported by Kontrakty.UA.
Last year, the Verkhovna Rada adopted law No. 11256-2 concerning the increase of excise taxes on fuel. The document states that the aim is to align Ukraine's tax legislation with European Union norms as part of the Euro-integration process. The first increase took effect on September 1, 2024. However, the excise rates will continue to rise annually until 2028.
Why Fuel Prices Are Rising
Since last year, the excise duty on gasoline has been set at 242 euros per 1000 liters, while for diesel and gas, the rates are 177 and 148 euros, respectively. From 2025, the excise tax will increase to 271 euros for gasoline, 215 euros for diesel, and 173 euros for gas.
This hike in excise taxes has led to an average increase in fuel prices by 2 hryvnias since the beginning of the year, notes Sergey Kuyun, director of the consulting company A-95, in a comment to RBK-Ukraine. According to him, the production cost of gasoline has risen by 3.5 hryvnias, and diesel fuel has increased by up to 4 hryvnias.
Factors contributing to the rising prices of petroleum products include not only the increased excise taxes but also the rising cost of oil on global markets and the devaluation of the hryvnia, the expert explains.
"The rise in the dollar exchange rate in Ukraine since the beginning of the year has added 20 kopecks to fuel prices. Additionally, oil prices rose from $74.5 to $82 per barrel in January due to sanctions against Russian oil tankers. This has forced China, India, and other consumers to seek new logistical routes without these tankers. As this search continues, prices will remain high, but this is a matter of a few weeks. After that, oil prices should return to previous levels," explains Sergey Kuyun.
Ukrainian gas station networks have managed to avoid a significant price increase due to large volumes of fuel imported into Ukraine in December. Kuyun adds that there have been minimal supplies of petroleum products at elevated prices for the second week now. He expresses hope that the reserves at gas stations will last until countries that previously purchased Russian oil find new suppliers, which will positively impact fuel prices.
According to the consulting group A-95, the average retail prices at Ukrainian gas stations as of January 23 are:
- premium A-95 gasoline: 60.66 hryvnias per liter;
- A-95 gasoline: 58.70 hryvnias per liter;
- A-92 gasoline: 54.45 hryvnias per liter;
- diesel fuel: 57.66 hryvnias per liter;
- gas: 37.48 hryvnias per liter.
The cost of petroleum products at different gas stations can vary by 7-10 hryvnias. For instance, the gas station "Avantage 7" sells a liter of A-95 gasoline at an average of 52.95 hryvnias, while at "WOG" stations, the same liter costs 61.99 hryvnias, and at "SOCAR" it is 62.99 hryvnias.
Will Fuel Prices Decrease Soon?
Sergey Kuyun predicts that despite the increase in excise taxes and the devaluation of the hryvnia, petroleum products in Ukraine may even decrease in price over the year. This is related to several factors on the international stage, particularly the policies of newly elected US President Donald Trump regarding oil extraction.
"Americans don't even need to significantly increase production, as there were already signs of market oversaturation last year. Adding a little more oil could lead to a sharp drop in prices. For example, in 2020 during the dispute between Saudi Arabia and Russia, the Saudis reduced the price to $20 per barrel in just a few days. And it cannot be ruled out that something similar could happen again," notes Sergey Kuyun.
The expert adds that if the price of Brent crude oil remains around $60 per barrel, it will have serious consequences for the Russian economy. After applying discounts and transportation costs, Russia would only receive about $40 per barrel. This price is essentially the production cost, so the Russian budget would miss out on substantial funds, potentially leading to economic upheaval in the aggressor country.
Moreover, the decline in oil prices will contribute to lower prices for petroleum products worldwide. According to Sergey Kuyun, high fuel prices are not beneficial for Ukrainian gas station networks, as at a price of 60 hryvnias per liter, gas stations earn the same as they would at a price of 50 hryvnias, but due to high costs, they lose a significant number of consumers.
The director of the consulting company A-95 also notes that the end of the war and the reopening of Ukrainian ports will influence the decrease in fuel prices in Ukraine. Currently, Ukraine is forced to import petroleum products from 15 countries, with the majority coming from Polish ports, which are more than 1000 km away. If the supply of raw materials is conducted directly, it could significantly lower the prices of gasoline and diesel in the market.
Recall that retail prices for gasoline and diesel in Ukraine decreased in November 2024. For more details on prices at domestic gas stations, read our previous material.