Fuel prices in Ukraine have seen a significant increase since the beginning of the year, with the cost of diesel and gasoline rising by an average of 10 hryvnias per liter. This surge has been attributed to a combination of factors, including a tax hike that took effect on January 1 and escalating tensions due to military operations involving Israel and the United States against Iran.
As of now, some gas stations are charging as much as 72 hryvnias for diesel and 71 hryvnias for 95-octane gasoline. In contrast, state-owned company Ukrnafta offers slightly lower prices at 69 hryvnias per liter for both diesel and gasoline. According to Naftogaz CEO Serhiy Koretsky, the company plans to minimize its markup during this challenging period.
“The price has risen on global markets; this is an objective reality,” Koretsky stated. He emphasized that as a state entity, Ukrnafta aims to provide fair pricing during the crisis.
Ukrainian Prime Minister Yulia Svyrydenko echoed this sentiment, asserting that despite the global price hikes, fuel costs in Ukraine remain lower than in several neighboring European countries.
However, there are concerns regarding the fairness of the price increases at gas stations. Danilo Hetmancev, a member of parliament and head of the finance committee, urged fuel retailers not to exploit public anxiety for excessive profits. He pointed out that the recent spike in fuel prices has little direct correlation with the conflict in Iran, considering the time lag involved. Hetmancev suggested that companies are selling fuel purchased at lower prices while raising costs prematurely.
Energy expert Hennadiy Ryabtsev also described the significant price increases as speculative in nature. In contrast, Serhiy Kuyun, director of the A-95 Consulting Group, argued that the rise in oil prices compels gas stations to adjust their prices now to prepare for future purchases. “If a company sells its fuel at old prices today, it may only be able to stock up for three weeks instead of a month,” Kuyun explained.
Increased consumer demand has also contributed to the price hikes, as drivers are filling their tanks more frequently, prompting gas stations to purchase fuel sooner than planned at higher rates.
On March 4, the Antimonopoly Committee of Ukraine gave market participants three days to justify their pricing strategies. Companies found to be in violation could face fines amounting to 10% of their total profits from the previous year.
During a briefing with President Volodymyr Zelensky, Koretsky confirmed the heightened demand for fuel but reassured that there is no current fuel shortage. He stated that companies are taking steps to prevent future deficits.
Koretsky noted, “There is a clear understanding of what needs to be done. We are experiencing global disruptions in supply chains, similar to those seen during the COVID-19 pandemic and the onset of the full-scale war in Ukraine. These crises peak and then decline.”
Since the beginning of the full-scale invasion, Ukraine has diversified its fuel sources to mitigate risks from Russian attacks on its oil refineries and storage facilities. This system remains in place and includes various transportation methods for fuel delivery. “We do not see any panic regarding fuel supplies,” Koretsky added.
Globally, the Strait of Hormuz is a critical passage for about 20% of the world’s oil. Disruptions in this region could significantly affect the international market. As of March 5, oil prices had risen by approximately 10%, with Brent crude trading around $80 per barrel. According to energy analytics firm Wood Mackenzie, if the flow through the strait does not resume quickly, oil prices could exceed $100 per barrel.
To alleviate the potential oil shortage, OPEC+ countries are reportedly considering increasing their daily production quotas to boost supply in the global market.
Fuel prices in Ukraine have surged due to a combination of tax increases and global market pressures linked to military actions in the Middle East. While officials assure there is no current shortage, concerns about price fairness and speculation persist among lawmakers and experts.