ANRE clarified the impact of Brent and Platts quotations on fuel prices in Moldova.
Given the increased interest in the dynamics of oil prices on the international market and their correlation with retail fuel prices in Moldova, the National Energy Regulatory Agency (ANRE) presented some technical explanations regarding the reference oil price and fuel price setting mechanisms, both internationally and locally. As ANRE notes, crude oil is a mixture of hydrocarbons that is extracted from the fields using oil wells. The unit of measure for oil is a barrel, which is equivalent to about 159 liters. Oil has different names (grades) depending on the region in which it is sold. The London Stock Exchange sells Brent crude oil and the New York Stock Exchange sells WTI (West Texas Intermediate) crude oil. More than 60% of the world's oil transactions are based on quotations of the Brent brand, which is why it is considered the benchmark for oil price setting. After extraction and sale, the oil is transported by sea or land to refineries. There, the oil is refined into various petroleum products: gasoline, diesel fuel, kerosene or jet fuel, fuel oil, etc. The price of petroleum products, such as gasoline and diesel, is correlated with quotations established daily by the U.S. company S&P Global Platts based on Platts methodology. According to these methodologies, buyers and sellers of petroleum products post their price requests and offers on Platts' "Market on close" (MOC) electronic platform every business day. The price per ton of gasoline or diesel fuel is set at 16:30 London time (18:30 Chisinau time) on the basis of the best selling price per ton registered on that day. During the trading day on the Platts (MOC) platform, the price per ton of petrol or diesel changes depending on the fluctuations in the price of oil on international stock exchanges, demand and supply of oil products, economic and geopolitical news, the availability of oil or oil products in stock, etc. Transactions are separated by geography, so the prices set by Platts accurately reflect the situation in that region. The price per ton set by S&P Global Platts is published and communicated only to its subscribers (production companies, traders, brokers, refineries, importers, etc.) after transactions are completed on the Platts MOC platform. This price (quotation) is used by professional market participants to determine the selling price of a ton of gasoline or diesel fuel, most often in the form of the arithmetic average of quotations for the last 2 weeks. The ANRE calculation methodology uses the average value of the average Platts quotations for the previous 14 days, correlated with the exchange rate MDL/USD, to which is added the excise tax, the value added tax and the specific trade margin (set by ANRE every six months). Thus, ANRE's pricing method, like the prices set by companies in international transactions, allows amortizing the effect of increases or decreases in prices produced on a particular day, by an average value. Therefore, any drop or increase in the price on international markets is felt only after a few days at petrol stations in Moldova. The National Energy Regulatory Agency announced once again that it would guarantee the correctness of the calculation of the maximum retail selling prices of basic standard-type petroleum products in accordance with the regulations in force and would monitor the compliance of all companies in this industry. // 28.03.2022 - InfoMarket
