When will fuel prices in France drop after oil price fall?
Both petrol and diesel costs increased across July as tensions flared in the Middle East
A drop in oil prices following the announcement of new negotiations between Iran and the US has not yet had an effect on fuel prices in France.
US President Donald Trump announced a new set of talks with Iran on Saturday (August 1) following weeks of renewed conflict that has included bombing runs and attacks on ships and military bases in the region.
Tensions in the area had seen Iran once again close off access to the Strait of Hormuz, a key waterway responsible for transporting around a fifth of global crude oil and liquefied natural gas supplies.
However the market reacted to Mr Trump's announcement, with the price of a barrel of Brent crude oil (the market benchmark) dropping by 5% by Monday (August 3) to $83.18. Other crude oil prices dropped between 6% and 7%.
Barrel prices crossed the $100 threshold during the early phase of the conflict, which also led to fears of petrol and jet fuel shortages across Europe.
These fears were mitigated however, and there has been relatively little disruption to summer travel due to a lack of jet fuel.
For its part, the Iranian government said it was not negotiating with the US, but was aiming to strike a deal with Oman for passage of certain vessels through the strait.
Fuel prices rise again in July
A successful conclusion of any negotiations is far from assured – the signing of a memorandum of understanding between the countries in June only temporarily halted the conflict before it resumed in July.
However, the fall in oil prices at the start of August signals confidence from the market.
This reduction is yet to fully reach filling stations, however, with petrol prices in France remaining high in recent days.
Diesel (gazole) prices reached €2.22 per litre on average in France at the end of July, rising 5c in a week.
Diesel was initially the hardest-hit by the conflict, seeing prices rise from €1.59 per litre at the start of the year to €2.33 per litre during an April price peak.
In July alone, diesel prices have risen from €1.86 to €2.22 per litre.
Petrol (essence) saw a slower price rise, not hitting peaks until May (€2.11 for SP95, €2.12 for SP98) before a slow drop in June.
However, prices for both SP95 and SP98 have crawled back up above €2 per litre at the end of July, rising by around 1c in the last week of the month.
However, price comparison site carbu.com indicates a decrease in price across a seven-day rolling average ( July 28 - August 4) for SP98, dropping by 3.5c.
Increases to diesel are less pronounced, pointing towards a stabilisation by next week.
How will prices fare long-term?
Drivers should not be too hopeful of sustained price drops.
Although the cost of crude oil materials may have dropped in recent days, these decreases often take days, if not weeks, to fully reach the pump.
Suppliers say that prices at the pump correspond to the costs related to making that specific batch of fuel.
It means therefore that if material, production, or transportation costs rise this leads to an increase for the final goods.
However, if any of these costs drop, this is not represented until the next batch of fuel is produced and sold to drivers.
In recent months, suppliers have come under scrutiny for quickly increasing petrol and diesel prices when crude oil costs increase, but not dropping them so quickly following a decrease.
The government continues to say it will not drop taxes on fuel regardless of price increases, as this will lead to a budgetary black hole of billions.
However, the €100 fuel aid scheme has been extended to August 31. It is aimed at drivers who use their vehicle for work (either commuting or professional service).
Fuel giant TotalEnergies has renewed its price cap at all service stations.
In the long-term, prices will largely depend on the negotiations between the US and Iran, and a long-term, safe opening of the strait that could support a sustained fall in oil prices.
You can find fuel prices near you using the official government price comparison site. It is worth checking as prices can vary significantly.
