International fuel rates have started to fall back as India and Iran look to step up Russian crude imports, in a downward trend likely to be fuelled by cooperation between the trio of countries on reducing the pressure of the oil price crisis, economists have asserted.
In Cambodia, which is totally dependent on the international fuel market, the retail prices of regular-grade petrol and diesel respectively decreased by about 9.48 per cent and 9.68 per cent on July 11, according to a notice issued by the Ministry of Commerce.
For the July 11-20 period, the retail selling prices of fuel in the Kingdom have been set at 5,250 riel or $1.29 per litre of regular EA92 (petrol with an octane rating of at least 92) and 5,600 riel or $1.37 per litre of 50ppm diesel (with sulphur content no more than 50 parts per million), said the notice, which contains values in both currencies.
The corresponding rates for July 1-10 were 5,800 riel ($1.42) and 6,200 riel ($1.52) per litre of regular EA92 and diesel, respectively, up from 4,100 riel ($1.00) and 3,750 riel ($0.92) during the period ended December 31, 2021.
Compulsory for licensed filling stations – although usually not strictly enforced for street vendors, the rates are issued every first, 11th and 21st of the month, calculated using data extrapolated from fluctuations in crude prices on the international market, and a number of taxes and charges that may be adjusted based on feedback from meetings with local oil importers and other stakeholders.
Ky Sereyvath, economics researcher at the Royal Academy of Cambodia (RAC) and director of the RAC’s China Studies Center, remarked that the drop in the Kingdom’s fuel prices coincided with the beginning of Russia’s fuel-supply partnership with India and Iran.
The partnership, Sereyvath said, is aimed at easing rising inflationary pressures in the two Asian nations, collaboration he suggested could prompt US intervention.
In Cambodia, inflation has been relatively mild, he said, arguing that a more worrying consequence of the fuel price hikes could be electricity supply disruptions, given that some power plants still use fossil fuels, which the state must purchase – even at a loss – to ensure enough stock to keep electricity rates from rising.
“If India and Iran continue to buy oil from Russia, I believe that oil prices could ease and return to normal in September,” he said.
Logistics and Supply Chain Business Association in Cambodia (Loscba) president Chea Chandara said the drop in fuel prices would be a boon for the transport sector and general public, reducing a number of costs.
“Rises in fuel prices push up rates for all kinds of commodities. Although fuel prices have declined somewhat, they’re still not in the three-thousand riel per litre range, which would be ideal for the transport sector, and result in a corresponding reduction in transportation,” he said.
In a World Bank report late last month, country manager for Cambodia, Maryam Salim, stressed that poor and vulnerable Cambodian households with limited savings would most likely receive the full force of the oil price rout.
“Rising energy and food prices due to the war in Ukraine are imposing additional burdens on the poor, and this will slow the pace of poverty reduction,” she said.
The ministry notice shows that the current semi-monthly regular EA92 rate was computed by adding the $0.8095 average Means of Platts Singapore (MOPS) over July 1-8, $0.1716 in taxes and associated charges ($0.0847 in customs duty, $0.0200 in additional fees and $0.0669 in special fees) and $0.20 premium – summing up to about $1.181 – plus an extra 10 per cent surcharge on top of that and a one US cent discount from “the oil companies” for a total of $1.2892, which was then converted and adjusted to the final values.
Similarly, the diesel rate was formulated from a $0.9686 mean MOPS (over the same six working days), $0.0595 in taxes and associated charges ($0.0000 in customs duty, $0.0400 in additional fees and $0.0195 in special fees) and $0.23 premium – tallying up to around $1.258 – with a 10 per cent fuel surcharge and one US cent discount from the unnamed firms for a sum of $1.3740, which was then converted and rounded to the current values.
And as has been customary since May 21, the notice mentioned that the two current per-litre rates include a 6.5 US cent reduction greenlit by Prime Minister Hun Sen “to ease the people’s livelihoods”.
