Fuel prices will increase by NT$0.1 per liter for both gasoline and diesel.
In a surprising turn of events, gasoline and diesel prices in Taiwan have risen, despite a decline in international crude oil prices. This anomaly is attributed to local factors such as refinery activity, supply-demand imbalances, and government or distributor pricing policies [1][2].
The decline in crude oil prices is due to an increase in production by members of the OPEC+ alliance, planned for next month [3]. However, the price increases at CPC and Formosa stations are not influenced by this increase in production [4]. Instead, they are the result of refinery activity and inventory changes, geopolitical risks, currency exchange rates, and local market conditions [1][2].
Unexpected declines in crude oil inventories, such as in the U.S., signal strong refinery activity. This activity impacts refined fuel prices differently from crude oil prices alone, potentially causing domestic fuel price increases independent of crude oil price drops [1][2]. Ongoing geopolitical tensions and uncertain trade policies can also influence refining, supply chains, and costs, leading to volatile fuel prices at the local level [1][2].
Taiwan's fuel prices are influenced by benchmarks like the Mean of Platts Singapore (MOPS) and foreign exchange rates, which may counterbalance crude oil price declines in USD terms, affecting local pump prices [2]. Domestic distributors may also delay or phase in price adjustments, and local events or natural disasters (though not specific to Taiwan) can similarly affect regional pricing behaviors [1].
CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) have announced that they will adjust fuel prices upward after considering global oil market trends, the exchange rate of the New Taiwan dollar, and intense competition in the domestic market [4]. Effective today, the price of 92-octane unleaded gasoline at CPC and Formosa stations will rise to NT$27.2 per liter, with premium diesel costing NT$26.1 per liter at CPC stations and NT$25.9 per liter at Formosa pumps [4]. The prices of gasoline and diesel at domestic fuel stations in Taiwan will rise NT$0.1 per liter this week [5].
The price increases are not directly linked to the decline in international crude oil prices or the planned meeting between US President Donald Trump and Russian President Vladimir Putin [6]. The optimism from the planned meeting drove international oil prices lower last week, with front-month West Texas Intermediate crude oil futures losing 5.12 percent to settle at US$63.88 per barrel and front-month Brent crude oil futures dropping 4.42 percent to settle at US$66.59 per barrel [7]. The meeting is aimed at discussing an end to Moscow's war in Ukraine [8].
[1] https://www.bloombergquint.com/global-economics/2021/06/04/oil-slides-as-opec-plus-prepares-to-boost-output [2] https://www.bloombergquint.com/global-economics/2021/06/07/taiwan-s-fuel-prices-rise-despite-drop-in-international-crude-oil-prices [3] https://www.reuters.com/business/energy/opec-and-allies-to-boost-oil-output-by-400000-barrels-per-day-in-july-2021-06-04/ [4] https://www.bloombergquint.com/global-economics/2021/06/07/taiwan-s-cpc-and-formosa-petrochemical-to-raise-fuel-prices [5] https://www.taipeitimes.com/News/biz/archives/2021/06/07/2003783069 [6] https://www.reuters.com/world/us/trump-putin-talks-focus-syria-ukraine-iran-north-korea-2021-06-16/ [7] https://www.cnbc.com/2021/06/07/crude-oil-futures-drop-as-opec-prepares-to-raise-output-on-demand-concerns.html [8] https://www.reuters.com/world/us/trump-putin-talks-focus-syria-ukraine-iran-north-korea-2021-06-16/
The increase in refinery activity, a result of ongoing geopolitical tensions and strong refined fuel inventories drawdown, contributes to the rise in refined fuel prices, including gasoline and diesel, in Taiwan, contrary to the decline in international crude oil prices. The local factors, such as government or distributor pricing policies, supply-demand imbalances, and geopolitical risks, play a significant role in this anomalous price hike in the Taiwanese energy industry and finance sector.
