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Will the petrol price fall next year?

With one war raging in Gaza, another dragging on in Ukraine, and the world’s central banks hiking interest rates to hold inflation in check, we’re living through uncertain times, and that’s making it hard to predict the future of oil prices. But despite all that uncertainty, there are some clear trends suggesting that oil prices might be coming down in the new year in a rare bit of good news for motorists.

Or at least that’s the view of American oil expert Daniel Yergin, who sees demand for oil growing, but supply outgrowing it.

“The central thing is that demand is growing. China has reopened, it’s not going to reopen again, so demand next year is expected to be about a million barrels a day less than the growth in supply, and as long as demand ─ supply and demand ─ dominate, you’re going to have that downward pressure on price,” Yergin said, in an interview with America’s CNBC TV.

In the face of that, OPEC is cutting production to hold up prices. But OPEC isn’t the only player in the oil game these days, with a lot of oil coming out of North America’s Permian Basin. In fact, production has increased by about a million barrels per day thanks to efficiencies of scale and the use of technology. Guyana is also stepping up its oil production, according to Yergin.

Geopolitical tensions

But while supply and demand are putting downward pressure on prices, there’s a lot of uncertainty in the oil market at present. Yergin believes that tensions in a little-known stretch of water known as the Bab El Mandev connecting the Red Sea to the wider oceans is a major concern. Approximately nine million barrels of oil a day pass through it, and it’s open to attacks from Houthi rebels backed by Iran, who are confident enough to attack US naval vessels.

There’s also a concern over the situation in Guyana, which has the fastest growing offshore oil development in the history of the world, according to Yergin. Guyana is under some threat from neighbouring Venezuela, and its mercurial dictator Maduro. Yergin says, however, that the situation may never escalate beyond the bluff and bluster stage.

In the absence of such geopolitical ructions, he thinks oil prices will likely be heading down in the first half of the new year, then rising in the second half as demand increases, and OPEC’s constricted supply starts to bite at the petrol pump.

Fuel certainty and EVs

It’s an unfortunate fact that most Australian motorists are at the mercy of world events when it comes to the price of their fuel. But of course, that’s not the case for those who’ve already made the switch to electric vehicles. They’re benefitting from lower “fuel” costs no matter what OPEC chooses to do with their oil production. That’s particularly the case if the electricity to charge those cars is coming from solar panels on the rooves of their homes.

With the price of some EVs now decreasing, and a growing choice of attractive vehicles appearing on the market, an increasing number of Australians are choosing an EV as their next vehicle. And many are taking advantage of the multitude of tax benefits on offer from a novated lease on an EV, with its lower running costs.

If you’ve decided that OPEC’s oil sheikhs have had quite enough of your money, and you’d like to find out how much you can save with a novated lease on an EV, then call Fleetcare today on 134 333.

Written by
Mark Schneider

Mark is a successful copywriter with over 20 years of professional writing experience.

We welcome him as a guest blogger to Fleettorque.

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