Iran-war faces new escalation: Gasoline prices are rising in Switzerland

Iran war faces new escalation: Petrol prices in Switzerland rise Fuel prices are rising in Switzerland due to the conflict in the Middle East and Trump's "Diesel Deal". Consumers should prepare for high energy prices in the long term. Oil prices are again as high as since May. On Friday, the price for a barrel of Brent crude oil exceeded $110, and the US crude type West Texas Intermediate exceeded $100. The main reason for the increase is the intensifying war in Iran and doubts about the conclusion of the "Diesel Deal" that US President Donald Trump made with Vladimir Putin. The Russian president has agreed to supply the world markets with crude oil products. Meanwhile, Trump suspended a sanctions package against Russia a few days before it came into effect. In view of the upcoming midterm elections, the US president is trying to lower prices at American gas pumps by all means. The approval ratings of the Republicans are in the basement due to high energy prices. However, a group of American representatives has introduced a bill to prevent Trump's plan to export more diesel from Russia to the USA and the world. The representatives reject measures that would provide Russia with additional revenue from the sale of energy carriers and thus finance the war against Ukraine. War reaches Swiss gas stations The worsening situation in the Middle East also strongly affects the energy markets. Last week, Iranian attacks on tankers in the Strait of Hormuz increased, while the Houthi rebels intensified their attacks on Saudi Arabia. The militia supported by Iran hit the headquarters of the state oil company Saudi Aramco with rockets last week. The escalating war is also noticeable at Swiss gas stations. According to the latest figures from the Swiss Touring Club (TCS), both gasoline and diesel have again become more expensive. Since last week, the average price for one liter of unleaded gasoline has risen by more than 2 percent to 2.16 francs, one liter of diesel costs 2.45 francs and is only one cent below the year-high in mid-September. The country experienced the last price hike in September. Since then, the situation has somewhat relaxed. This seems to be over now. The recent price increase is partly due to the threatened sea routes in the Middle East and partly to transport problems in Europe and Switzerland. The low water level on the Rhine, due to the summer drought, makes imports more expensive. Switzerland imports three-quarters of the fuels for road transport. The rest is produced by the only Swiss refinery in Cressier (NE). Most of the crude oil products reach Switzerland via Basel and come from refineries along the Rhine and from the Amsterdam, Rotterdam, and Antwerp area. These trade centers are supplied from the North Sea, the Middle East, and Africa. These centers largely determine the price of gasoline and diesel at Swiss gas stations. The final price consists of the procurement costs on the international market, the transport costs, and state taxes. Precarious situation with jet fuel The high fuel prices burden Swiss households and companies. However, according to the Federal Office for Economic Affairs, the physical supply of the country with gasoline, diesel, and heating oil is ensured, even though the situation has worsened compared to the previous week. The situation is precarious with jet fuel. Due to the low Rhine level, train cancellations, fewer pipeline deliveries, and restrictions on rail transport in the Rhine Valley, the supply of kerosene "cannot be fully guaranteed," the authority stated. The person responsible for economic state supply has released the relevant reserve stocks for two weeks. As a land without its own oil or gas reserves, Switzerland is completely dependent on imports. In case of shortages, reserve stocks can meet the demand if the free market cannot anymore. Tank capacities of 7 million cubic meters for oil products are available throughout Switzerland, which corresponds to almost a year's consumption. However, there is no long-term solution to cope with high prices. Permanently high energy prices Moreover, an environment with permanently high energy prices is emerging on a broad front. According to renowned experts, the supply of refined fuels is now so scarce that a re-evaluation of the entire energy market is likely. Furthermore, Europe could also face situations with other energy carriers like natural gas following the outbreak of the Ukraine war in 2022, because gas storage in Europe is not sufficiently filled. Switzerland is also affected, as natural gas is an important energy carrier there. However, the country has no of its own gas reserves. Switzerland has established gas reserves in the nearby countries and concluded corresponding agreements with France and Germany. The Federal Council has instructed Swiss gas suppliers to keep reserves until winter 2027/28. There is no reason to remain calm in view of the stressed energy markets and the war-torn energy infrastructure.