Gasoline, diesel, and autogas: Should we brace for rising fuel prices and shortages in 2025?

Starting January 1, 2025, fuel excise taxes in Ukraine will increase, which is expected to affect prices. However, there is currently no rush in the fuel market, so the prices of gasoline, autogas, and diesel are not anticipated to change significantly at the beginning of the new year. What lies ahead, and what factors will impact the pricing of gasoline, diesel, and autogas?

According to financial analyst and member of the Ukrainian Society of Financial Analysts Andriy Shevchishin, there are fundamental factors influencing fuel prices: the exchange rate of the hryvnia, excise policy, and global oil prices.

"One trend in Ukraine has been the formalization of salaries across most networks (except for a few large companies operating 'in the white'). This trend might reshape the market in 2025 and affect the prices from 'social' networks," Shevchishin added.

Excise Increases: How This May Impact Gas Station Prices

As of January 1, 2025, the next phase of the process will commence under the law No. 11256-2 regarding the increase of fuel excise taxes. While the elevated excise taxes on gasoline, diesel fuel, and autogas are expected to influence fuel prices at gas stations, prices remain stable for now, primarily because traders have already tested these changes. Therefore, as energy market expert Hennadiy Ryabtsev noted, significant changes will only occur in the tax structure, including an increase in military fees and the introduction of a tax on gas station operations.

Another fuel market expert, Dmytro Leushkin, adds that there is currently atypical behavior among traders, who are hesitant to purchase fuel and lubricants in anticipation of the excise tax increase. There are several reasons for this, particularly the market saturation and the winter season, which this year is expected to have a record-low demand level, according to the expert.

From January 1, 2025, the next phase of the process will commence under law No. 11256-2 regarding the increase of fuel excise taxes

Leushkin also pointed out another factor affecting market participants' behavior: the unpredictable policies of Donald Trump, who will come to power in the U.S. in January.

"Traders fear that if they stock up to profit, Trump might flood the oil market. Then they won't be able to profit, and no one wants to 'lose out,'" Leushkin added.

Summarizing all factors, the expert noted that an increase in prices at Ukrainian gas stations due to new taxes is not expected before early February 2025.

Financial analyst Andriy Shevchishin also believes that the increase will be moderate and gradual.

"A rise in the dollar to 45 UAH, along with an anticipated decline in global oil prices, will lead to a restrained increase in prices at the pumps. I expect a gradual rise of 3-4 UAH per liter," Shevchishin provided in his forecast.

Oil Prices Rise: What to Expect in Ukraine Regarding Fuel Costs

Meanwhile, after a week of decline, oil prices rose again on December 24. "Last week, both key oil benchmarks fell by more than 2% due to concerns about global economic growth and oil demand after the U.S. central bank expressed caution regarding further easing of monetary policy," reports Reuters.

Brent oil futures increased by 36 cents, or 0.5%, to $73.30 per barrel, while West Texas Intermediate futures rose by 39 cents, or 0.6%, to $69.85 per barrel.

As agency specialists note, this does not threaten European supplies, as the 'Druzhba' pipeline, which transports Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic, and Germany, has resumed operations after a technical halt. Typically, this pipeline transports 300,000 barrels of oil per day.

Brent oil futures increased by 36 cents, or 0.5%, to $73.30 per barrel, while West Texas Intermediate futures rose by 39 cents, or 0.6%, to $69.85 per barrel

As Hennadiy Ryabtsev explained, escalating relations between Ukraine and neighboring countries could become a factor influencing price changes.

"Various force-majeures could arise here, for example, a deterioration in relations between Ukraine and Slovakia, which might lead to certain border issues with that country. However, there are not many Slovak petroleum products to significantly impact prices. Next year, just like this year, prices will be determined by the cost of petroleum products at the border, as 85% of petroleum products are imported into Ukraine, along with the exchange rate of the national currency. The excise tax is paid in euros at the National Bank's rate, and purchases on European markets are also made in euros. Currently, we are in a 'dead' season, during which significant purchases and sales of petroleum products are not occurring due to the Christmas holidays," Ryabtsev noted. Therefore, he believes that until January 15, there will not be significant changes in the sector.

"European suppliers will remain the primary source; however, Slovaks and Hungarians may worsen conditions due to the gas transit halt. However, the market is highly diversified, so I hope that fuel can be sourced from other places relatively quickly," adds Andriy Shevchishin.

Meanwhile, experts hope that there will be no talk of fuel shortages in 2025, as European enterprises are already producing fuel volumes considering the share purchased by Ukrainian traders. Moreover, if the active phase of the war ceases during 2025, work on restoring Ukrainian capacities, primarily the Kremenchuk Oil Refinery, could begin. New mini-refineries could also be launched.

Another influencing factor on crude oil prices is political, as markets react to statements, particularly from the newly elected President Donald Trump. Currently, experts believe that Trump's statements regarding U.S. control over the Panama Canal do not pose a serious threat to the oil markets but are already causing price fluctuations. As writes the Polish publication Gospodarka Morska, hedge funds are displaying optimism regarding WTI and Brent prices, considering possible sanctions against Iranian and Russian oil, as well as prospects for economic stimulus in China, which could increase fuel demand.