16th August, 2021 TONGAN The Competent Authority wishes to inform the public on the continuous rise in petroleum prices.
The Covid 19 economic disorder has led to substantial fluctuations in global energy demand and supply. The Crude oil crash in March 2020 led to the average Dated Brent Crude oil price drop to around USD20 bbl. With the spread of the Covid 19 pandemic, growth, travel and trade stagnated, and the price of petroleum-based products dropped sharply. However, prices started rising early this year supported by three main factors: rollout of vaccines, economic recovery particularly in developed countries and OPEC+ output policy (that is restricting output).
The Covid impact continues to affect the petroleum prices with the average monthly Dated Brent crude oil drop in mid-March to mid-April at USD 20.87 bbl then increasing to USD41.52 (Oct 2020 average), USD 65.70 (March 2021 average) and with the July 2021 average up to USD 74.29 bbl.
The Government as a result, have made efforts to help hold down the continuous increase through a 5 seniti subsidy on the May- June petroleum pricing and a further reduction in excise duty of 10 seniti in the July – August petroleum pricing. This reduction in duty is estimated to cost the Government over $4 million annually.
Despite the efforts, the international crude oil and petroleum prices continued to rise which will again result in further increases for the August – September pricing.
Meanwhile, crude prices fell in early August, and if the prices continue to hold at this level or continue to fall, we will expect a drop in retail prices next month in Tonga.
ENDS
Issued by the: Ministry of Trade and Economic Development
