Australian motorists are set to benefit from further drops in fuel prices as reduced oil demand from China continues to lower global oil prices.
Analysts predict further falls
The average national petrol price in Australia has already fallen to 178.4 cents per litre, according to the Australian Institute of Petroleum, and analysts predict prices could dip to between $1.65 and $1.70 per litre in the coming weeks.
Brent Crude prices recently fell below US$70 per barrel, their lowest in nearly three years, and are currently hovering around US$73. Some analysts expect prices could fall as low as US$65 per barrel.
Both the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have revised their forecasts for global oil demand growth due to weaker Chinese consumption.
China, a major driver of global oil demand, is undergoing a slowdown in its consumption as the country shifts towards renewable energy sources.
Vivek Dhar, a commodity strategist at Commonwealth Bank of Australia (ASX:CBA), attributes the lower petrol prices to China's declining oil demand growth, which has slowed to about 1% this year, down from 10% in 2022.
OPEC has also trimmed its forecast for Chinese oil demand growth in 2024 to 650,000 barrels per day, from an earlier estimate of 700,000 barrels.
The stronger Australian dollar has also contributed to lower fuel prices, as Australia purchases oil in US dollars.
What’s on the horizon?
Uncertainty still looms over the Middle East, however, with escalating tensions between Iran and Israel threatening to disrupt oil supply and reverse the current trend.
On top of this, any potential shifts in OPEC’s production strategy could further impact global oil prices.
Despite the known and unknown unknowns, to paraphrase Donald Rumsfeld, consumers and businesses alike are welcoming the price relief, with some companies already passing on the savings to their customers.