Local motorists can expect to pay high prices for petroleum products in the new month of August, the Ministry of Finance has confirmed.

In a statement issued by the Ministry on Sunday, the new Minister of Finance, Mulipola Anarosa Ale-Molio’o announced the changes to the petrol prices effective August 1, 2021.

The retail price for petrol increased by 8.82 sene per litre – moving from $2.68 to $2.78 per litre. Similarly, for diesel the price moving from $2.56 to $2.65 sene per litre which is an increase of 8.96 sene per litre.

And for kerosene, the retail price will increase by 7.48 sene per litre, from $2.20 to $2.28.

“The market prices for August 2021 in the M.C.W.P. are based on June M.O.P.S.,” the statement reads. “Crude Oil and Product prices continue to increase with O.P.E.C. countries restricting crude oil supply, despite increasing demand.

“Recent advice is that the agreement to increase production may be around the corner.”

This month’s petrol retail prices are almost double prices for August 2020, a drastic drop that was caused by COVID-19 restrictions around the world.

Last month, the International Energy Agency (I.E.A.) reported that robust global economic growth, rising vaccination rates and easing social distancing measures will combine to underpin stronger global oil demand for the remainder of the year. 

However, escalating COVID cases in a number of countries remain a key downside risk to the forecast.

In June this year the I.E.A. reported that the world’s demand for oil will return to pre-pandemic levels by the end of 2022 as recovering economies require oil-producing nations to pump more fossil fuels.

The watchdog’s forecast report that the vaccine rollout is expected to play a role in increasing oil consumption. However, it warned that “slow vaccine distribution could still jeopardise the recovery in non-OECD countries.”

The World Bank reported in May that crude oil prices have recovered from their COVID-19 slump, driven by firming demand and continued production restraint by the Organisation of the Petroleum Exporting Countries (O.P.E.C.) and its partners.

And as demand is expected to return to pre-pandemic levels, the world's fossil fuel producers are expected to raise production, which in turn is expected to drive up prices.

“Crude oil consumption continues to slowly increase after plunging 9 [per cent] in 2020,” the report notes.

“Gasoline and diesel have mostly returned to pre-pandemic levels, but jet fuel consumption remains considerably lower as air travel has been slower to recover.”

The report further noted that the positive oil forecast depends on the COVID-19 pandemic containment.

“Oil demand growth estimates have been revised upward recently, reflecting the improved economic outlook and policy support measures,” the World Bank report notes.

“But the expected recovery in demand depends on the pandemic being successfully contained. Renewed outbreaks and lockdowns could extend the weakness in oil demand and lead to lower oil prices.”