Things are hot in the global fuel market right now. Oil prices are soaring after a drone attack has dealt a major blow to oil production in Saudi Arabia. What can farmers expect when ordering diesel?
Now that the harvest is in full swing, resulting in soil cultivation, arable farmers, livestock farmers and contractors are burning a lot of diesel. There is a good chance that those who have to have their tank filled in the coming weeks will pay considerably more. This is the result of sharply rising oil prices. After the attack in the Middle East, the price of 1 barrel of Brent rose the most since the start of this quotation in 1988.
Production halved
The 2 Saudi Arabian oil extraction installations, which were partly destroyed by a drone attack, together account for 5% of global oil production and 50% of the country's annual production. This amounts to a loss of 5,7 million barrels per day. Since there is a direct link between the oil price and fuel prices, consumers and companies will certainly notice these price increases. On Monday, September 15, 1 barrel of Brent oil was trading at $68 per barrel, while before the weekend it was around $60 per barrel.
Petrol and diesel prices are expected to increase by €0,01 to €0,02 per liter soon. In the longer term, the price could increase by approximately €0,05, insiders believe. However, the affected oil company is trying to get its production back up to standard as quickly as possible. To what extent this is possible in the short term remains an unanswered question. Analysts say this could take several days to several weeks. A price of $80 to $90 per barrel is therefore taken into account. At the end of April, the price of Brent oil was at its current high: $74 per barrel.
Anyone who now has the diesel tank refilled will immediately notice the consequences. For example, LTO Member Benefit for deliveries of up to 4.000 liters comes to a price of €108,51 per 100 liters (+4,7%) and a price of €107,06 per 100 liters for a delivery of 4.000 liters or more (+4,81% ). At Farmers4all the price last week was €102 per 100 litres, an increase of €1. To avoid further price increases, it may be advisable to have the tank filled now.
Trump influence
Meanwhile, US President Donald Trump has also intervened in the matter. His country points the finger at Iran and tries to capitalize on the temporary tightness on the oil market. By tapping additional oil reserves, President Trump is trying to stabilize the market.
Not only the oil market, but also the market for ethanol has increased. This results in the agricultural markets also moving. On the CBoT in Chicago, the corn contract was trading at $17 per ton on Tuesday, September 374, up from $372 previously. That is the highest level in 17 days. Corn is the most popular crop for bioethanol production. The price of soy also moved slightly higher. Scarce oil production is also good news for the agricultural commodity markets; especially given the good corn production in South America. China also still has a huge corn stock (56 million tons).
Higher dairy prices in the offing?
In addition to a higher grain price for arable farmers, a small benefit may also be noticeable for dairy farmers. For example, it is said in the sector that higher oil prices are favorable for the demand for dairy products. This is because countries in the Middle East with higher oil incomes purchase more dairy products. However, when we compare the Global Dairy Trade with the quotation of Brent oil, a correlation is not easy to make.