Phillepus Uusiku- The association between the Organisation of Petroleum Exporting Countries (OPEC) and independent oil producers such as Russia reached an agreement last month to cut oil production.
The oil producers cut production by close to 10 million barrels per day in May and June as a response to falling oil demand caused by the corona virus pandemic, says Andreas Simon, the senior public relations officer at the Ministry of Mines and Energy.
These cuts are expected to aid the recovery of crude oil prices on the supply side of the crude oil business equation, he says.
He pointed out that Saudi Arabia, the biggest oil producer in the OPEC economic integration, has further announced to cut production by 1 million barrels per day in June.
On the demand side of the refined products business equation however, increases are expected in the near term as more countries continue to ease their respective lockdown restrictions, he added.
In terms of the pricing of refined oil products, the prices of refined oil recorded an increase in petrol prices while diesel prices remained stable.
One barrel of petrol is traded at an average of about USD 28 in comparison to an average of USD 20at the end of April 2020, Simon said.
He added that a single barrel of diesel is traded at an average of about USD 27 in comparison to an average of USD 26 at the end of April 2020.
The significant fluctuation in petrol prices and the stability of diesel can be attributed to the movements of supply and demand for instance product flow in a very dynamic market.
In terms of the international money market, the USD maintained its status as the main currency used for conducting foreign transactions. The latest data indicates a minor appreciation of the N$ against the USD. On average, 1 USD is exchanged for N$ 18.4 in comparison to an average of N$18.5 per USD at the end of April, he pointed out.
The monthly review revealed an over recovery of diesel and an under recovery on unleaded petrol. The under recovery on petrol has found the national energy fund to be in a healthy position and will thus be absorbed in its entirety on the behalf of local fuel consumers.
The over recovery on diesel and the under recovery on petrol are relatively low amounts and does not call for current adjustment. The ministry therefore resolved to keep the fuel pump prices unchanged for the month of June to ensure price stability, he emphasised.
The fuel pump prices in the coastal town Walvis bay which happens to be the port of entry will remain N$ 10.35 per litre on petrol and N$ 11.13 per litre on diesel respectively. The review is made taking into account the need to ensure the orderly importation of fuel products into the country, he says.