Diesel prices set to rise as Europe enters heating season

Diesel prices are likely to rise as the heating season approaches and fuel consumption increases in Europe and the United States, Yle reports. Crude oil was trading at 107.50 dollars a barrel on Monday, close to levels last seen in the spring.

According to the fuel price monitoring website polttoaine.net, 95-octane petrol cost an average of 2.21 euros per litre on Sunday, while diesel averaged 2.37 euros per litre.

Hanna Kalenoja, a transport expert at the Central Chamber of Commerce, said diesel prices were under upward pressure because diesel is the same product as light fuel oil, whose use increases during the heating season.

Petrol prices face less pressure because consumption falls after the summer holiday travel season. Kalenoja said geopolitical risks had already been reflected in petrol prices.

Saudi Arabia announced on Friday that it had temporarily closed an oil pipeline running across the country from east to west. Iran-backed Houthi rebels are also tightening their grip on the oil route through the Red Sea, which has served as an important alternative to the Strait of Hormuz.

The war in Ukraine is adding to the pressure. Drones have damaged Russian oil ports, while oil production has declined in both locations at the same time.

Kalenoja said she did not want to give precise forecasts for petrol and diesel prices during the winter. She said estimates for the coming months varied widely, but the overall outlook was for higher prices.

In Finland, prices will also be affected by the switch to winter diesel around the turn of November and December. Winter diesel is produced in smaller quantities and with slightly different additives, making it somewhat more expensive.

High prices may, however, reduce demand. The International Energy Agency has sharply lowered its estimate for global oil demand this year and now expects demand to decline by 1.6 million barrels per day. In July, it forecast a reduction of one million barrels per day.