Domestic oil price surges on global cues in late February

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Fuel oil prices are constantly edging up on the depreciation of Kyat against US dollar and a sharp increase in crude oil prices in the past two days, according to the filling stations in Yangon Region.
On 1 January 2022, the prices stood at K1,390 for Octane 92, K1,440 for Octane 95, K1,375 for diesel and K1,385 for premium diesel, whereas the prices inched higher to K1,745 for Octane 92, K1,800 for Octane 95, K1,720 for diesel and K1,730 for premium diesel. There is a price gap of K345-360 per litre within two months, according to the local fuel oil market.
The fuel oil price is highly correlated with the foreign exchange rate. At present, the exchange rate is pegged at around K2,000 in the local forex market.
Additionally, domestic oil price is positively related to global market. Oil prices jumped in the global market as Russia-Ukraine crisis escalated, with US$91.59 per barrel for WTI crude and $97.93 for Brent crude at the present time.
When a dollar was valued only K1,330 in early February 2021, the fuel oil was estimated at K590 per litre for Octane 92, K610 for Octane 95, K590 for diesel and K605 for premium diesel then in domestic retail market.
Consequently, in a bid to steer dollar rally in local forex market, the Central Bank of Myanmar (CBM) sold US$65 million at its auction market rate in January this year.
Additionally, the Ministry of Commerce in coordination with Myanmar Petroleum Trade Association implemented a scheme to distribute fuel oil at fairer rate through the government sponsored filling station chains starting from 22 September 2021. The total volume of fuel oil that are sold at very cheap rates is equivalent to the amount that the oil importers directly purchased the foreign currency from the CBM. The CBM has directly sold over $87 million to the fuel oil sector so far.
Normally, Myanmar yearly imports 6 million tonnes of fuel oil from external markets, the Ministry of Commerce stated.—GNLM

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