Price of gasoline to fall by 29 agorot per liter next month

The price of gasoline will fall next month by 29 agorot per liter. Gasoline price stands at NIS 6.38 per liter now, and dropped by 4.55% to NIS 6.09. This decrease is joining a decrease of 27 cents last month. The decrease was offset due to the increase in excise tax on gasoline by 4 agorot.

The reason for the decline in gasoline prices is due to the decline in oil prices in the last month. Oil in recent months lost about a third of its value and has reached its lowest level since March 2009. Last week oil was traded at $ 38 per barrel. The decrease stems mainly from the peak production of oil by OPEC cartel. Saudi Arabia alone increased its daily oil output of 430 thousand barrels to 7.37 million barrels per day.

Other reasons for the decline in oil prices in the last month are the expectations for the rise of US interest rates next month, a surprising increase in inventories and the talks on lifting the sanctions from Iran. Lifting the sanctions could increase significantly the supply of oil during a time in which its demand is relatively low.

However, after a drop of 20% since the beginning of the month, on Thursday the WTI oil price jumped by about 10.3%, the sharpest daily jump since March 2009. The reason for this is Venezuela's request to convene an emergency meeting of OPEC. According to the report, Venezuela wishes to discuss the sharp declines in black gold with Russia, which is not a member. On Friday, oil jumped by another 6.3%, in light of the news of the fall in output of Nigeria and the United States' high growth in the second quarter of the year. The latter may announce that US oil demand will increase.

After soaring by 17% in two days - the second daily rise, the sharpest in the last 25 years, the price of a Brent crude is estimated at about $ 50, and the price of WTI oil barrel is around 45 dollars.

As known, oil price fluctuations do not affect the price of gasoline in Israel directly, in view of the heavy tax imposed on fuel prices. The tax component is more than 60% of the price of oil and mitigates the decline in oil prices on the final price of fuel. As noted, the decline this month was offset by the tax authority's decision to raise the excise tax.

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