Gasoline prices will increase in the first adjustment periods of 2024

Mr. Nguyen Ngoc Quynh, Deputy General Director of the Vietnam Commodity Exchange - MXV, said that there are many factors affecting the development of world oil prices in 2024. Among them, political tensions and OPEC+ production cut policies can push oil prices up, but slowing economic growth and lower consumption can cause prices to stagnate or go down.

In the first scenario, if demand growth is weak, OPEC+ will maintain its low production policy or even cut further to support oil prices. At its meeting in late November 2023, the group decided to voluntarily cut production by 2.2 million barrels per day. Accordingly, the market could be in deficit by 500,000 to 800,000 barrels per day in the first quarter of 2024. Under this neutral scenario, WTI oil prices could average around $80 per barrel and Brent around $85 per barrel.

The second scenario - the worst case scenario, if tensions spread to the Middle East or involve the US or Iran, the world's oil flow arteries will be greatly affected, including strategically important straits including the Strait of Hormuz under Iranian control and the Bad Al-Mandab Strait under the influence of the Iran-backed Houthi rebels in Yemen. If the conflict causes serious disruption, the possibility of oil prices exceeding $100/barrel is entirely possible.

According to Mr. Quynh, developments in world oil prices will significantly affect domestic gasoline and oil prices in 2024, because Vietnam is a gasoline and oil importing country.

"With the neutral scenario that I analyzed above, it is likely that domestic gasoline prices will also increase slightly in early 2024, when the impact of OPEC+ production cuts and tensions around the Red Sea region affect global prices. But overall, in 2024, supply and demand will be relatively balanced, oil prices will continue to be stable and may be equivalent to the average level of 2023," said Mr. Quynh.

According to Mr. Quynh, in 2024, it is unlikely that domestic gasoline prices will spike abnormally like in 2022. Regarding global factors, it is largely due to barriers from global growth pressure, at least in the first half of the year. At the end of 2024, the US will hold a new presidential election, so this country will also find ways to curb rising prices.

Regarding domestic factors, the promulgation of Decree 80/2023/ND-CP amending and supplementing a number of articles of Decree 95/2021/ND-CP and Decree 83/2014/ND-CP on petroleum trading, which shortens the time for managing petroleum prices from 10 days to 7 days, will help domestic petroleum prices approach world market prices.

In addition, the Government has also approved the National Petroleum and Gas Reserve and Supply Infrastructure Plan for the 2021-2030 period, with a vision to 2050. In the long term, this is an effective solution to help stabilize domestic supply, demand and prices of petroleum.

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