Australian Drivers to See Lower Fuel Prices Due to Reduced Chinese Oil Demand and OPEC‘s Outlook Adjustment
Australian drivers are poised to enjoy further reductions in fuel prices as China’s decreased demand for oil leads to a drop in global oil prices.
The current average national petrol price in Australia has dipped to 178.4 cents per litre, as reported by the Australian Institute of Petroleum. Experts anticipate that these prices may continue to decrease, potentially reaching between $1.65 and $1.70 per litre in the near future.
Brent Crude prices have recently experienced a significant decline, falling below US$70 per barrel—the lowest point in nearly three years. They are now fluctuating around US$73, with some analysts suggesting they could drop as low as US$65 per barrel.
Both OPEC and the International Energy Agency (IEA) have adjusted their projections for global oil demand growth, reflecting a slowdown in Chinese consumption. China, a significant contributor to global oil demand, is experiencing a decrease in consumption as it moves towards renewable energy sources.
Vivek Dhar, a commodity strategist at the Commonwealth Bank of Australia, has linked the decrease in petrol prices to China’s reduced oil demand growth, which has slowed to approximately 1% this year, compared to 10% in 2022.
OPEC has also revised its forecast for Chinese oil demand growth in 2024, lowering it to 650,000 barrels per day from an initial estimate of 700,000 barrels.
The strengthening of the Australian dollar has also played a role in the reduction of fuel prices, as Australia purchases oil priced in US dollars.
However, uncertainty remains in the Middle East, with tensions between Iran and Israel potentially disrupting the oil supply and affecting the current downward trend in prices.
Additionally, any changes in OPEC’s production strategy could influence global oil prices.
Despite these uncertainties, consumers and businesses are appreciating the relief from lower prices, with some companies already passing on the savings to their customers.