Oil price increase on the stock market/ How it translates into fuel price increase in Albania
The price of fuels in Albania is closely linked to developments in international refined oil markets, in addition to the global benchmark that is London Brent crude. One of the most widely used indicators in Europe for gas oil is the London Gas Oil contract, which is traded on the Intercontinental Exchange (ICE) in London and also on the professional paid platform, Platts. This indicator serves as a reference point for fuel traders and importers in many European countries, including our country, as it reflects the international price of gas oil used to supply the markets.
According to the latest data from international markets, the London Gas Oil contract has risen to about $1,153 per ton, marking an increase of $77 per ton, or about 7.1% within the day. Before the attacks on Iran began, this contract was trading at about $730 per ton. So, in the space of a week, refined oil on the London Stock Exchange has increased by about $420 per ton. This is the highest level of the 52-week average, which indicates strong upward pressure on energy markets.
To understand what this could mean for prices in Albania, it should be borne in mind that on the stock exchange the price is expressed in dollars per ton, while on the domestic market fuel is sold in lek per liter. Therefore, in order to assess the impact of movements on the stock exchange, it is necessary to translate this change from tons to liters.
In practice, one ton of diesel oil translates to approximately 1,170 to 1,180 liters. This is related to the average density of this fuel, which is about 0.84-0.85 kilograms per liter. Another important factor is the exchange rate, since the price on the stock exchange is expressed in dollars, while in Albania fuel is paid in lek. For illustration, an indicative exchange rate of about 82.8 lek per dollar can be taken, according to the "Bank of Albania", which helps to understand the approximate impact of movements in international markets.
If this method is used for the increase on Friday only on the stock exchange, it turns out that the increase of about 77 dollars per ton translates into approximately 5 to 6 lek per liter increase in the basic cost of fuel. When the Value Added Tax (VAT) of 20% is also calculated on this amount, the effect on the final price could reach about 6 to 7 lek per liter, if the change on the stock exchange is fully passed on to the consumer.
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