State-owned oil supplier CPC Corp, Taiwan (CPC, 台灣中油) announced on Saturday that it would cut domestic gasoline and diesel prices by NT$1.0 (US$0.03) and NT$0.7 per liter respectively this week, reflecting reduced upward pressure on international energy prices.
The announcement marked an end to the company’s 11-week streak of leaving its retail fuel prices unchanged amid military conflicts in the Middle East.
CPC said in a statement that international crude prices fell last week after the US and Iran announced plans to sign a memorandum of understanding to extend their ceasefire for 60 days and open the Strait of Hormuz, the choke point for about one-fifth of the world’s oil and natural gas supply.
Photo: CNA
Front-month Brent crude oil futures — the international oil benchmark — last week fell 7.74 percent to settle at US$80.57 per barrel on the Intercontinental Exchange in London.
Meanwhile, West Texas Intermediate crude oil futures — the US oil gauge — lost 9.75 percent in the week to US$76.6 per barrel on the New York Mercantile Exchange.
Under CPC’s floating price mechanism, based on a weighting of 70 percent Dubai crude and 30 percent Brent crude, the average international oil cost fell to US$76.39 per barrel last week, down from US$90.12 the week before.
This week, the company’s retail gasoline prices are set to fall to NT$31.4, NT$32.9 and NT$34.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while prices for premium diesel drop to NT$30.3 per liter, CPC said.
The announcement followed the government’s price stabilization measures that saw CPC absorb an estimated NT$17.7 billion in losses from sales of domestic gasoline and diesel since the US and Israel attacked Iran at the end of February.
Although international oil prices have fallen, the future of the situation in the Middle East remains to be seen, the company said, as US-Iran talks on a permanent ceasefire were set to commence yesterday in Switzerland.
While the hard-won interim deal between the US and Iran signaled an end to hostilities, it is only the beginning of wrangling over the long-running dispute over Iran’s nuclear capabilities.
In another sign of potential risk, the fighting between Israel — which is not a party to the deal — and Hezbollah prompted Tehran to claim a ceasefire violation and flex its leverage over the Hormuz chokepoint.
Additional reporting by Bloomberg
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