Global oil prices jumped 20 percent in the wake of the weekend’s attack on a Saudi Arabian oil facility that has removed 5 percent of global supplies, or an estimated 5.7 million barrels a day of lost production. It is the single biggest disruption on record, according to Bloomberg. Based on reports, analysts reckon significant volumes could come back on stream within days, but it could take weeks to restore full capacity.

If global oil production is reduced, supply will tighten and oil prices will surely jump, said U Kyaw Kyaw Hlaing, CEO of the Smart Group of Companies. “Oil prices have been declining recently but if production is reduced, prices will increase,” he said.

Local experts expect the spike in global oil prices to be temporary but warn that local fuel prices track global trends. “If global oil prices stabilise, then local prices will be stable as well. But if prices remain high and the local prices will be high,” said U Win Myint, secretary of Myanmar Petroleum Trade Association.

He added that local fuel prices are regularly subject to global price shifts. “Myanmar imports fuel and resells it locally at the market rate,” he said.

The local oil price also depends on the currency exchange rate of Myanmar. If the exchange rate is stable, the oil price will be stable. If the kyat is weak, then import prices will be high, said U Win Myint.

Although Myanmar earns foreign revenue by exporting natural gas, it imports petrol and diesel by using foreign currency.

“In the past, the income from gas sales balanced out with the cost of importing oil. Recently, our country’s gas sales have dropped while oil imports increased. The money doesn’t balance out anymore as we are now importing more oil,” U Win Myint said.

Myanmar imports diesel and petrol from Singapore and there are also imports from Thailand and China at the border.

According to the Ministry of Commerce (MOC), fuel imports have actually decreased so far in fiscal 2018-19, with diesel imports falling by a value US$379 million and petrol falling by $5 million, according to U Khin Maung Lwin, permanent secretary of the MOC. – Translated

Source: https://www.mmtimes.com/news/drone-attacks-saudi-may-affect-local-fuel-prices.html