Saudi Aramco raised retail diesel prices for 2024 by 53 percent to SAR1.15 ($0.30) per liter from SAR0.75, as part of the annual price adjustment.
Unprecedented leap
The global oil producer has raised prices for local consumers three times since 2016. However, the recent jump of 53 percent is unprecedented. According to EFG Hermes Research, diesel prices have been reset at the end of each year since 2021. However, they witnessed increases in the last two years of SAR 0.11-0.12 per liter.
In this context, EFG Hermes Research said, “Impact on consumer names should not be that significant, in our view, as total transport costs are less than 5 percent of total cash costs for most names. Also, in comparison to 2016, this is not as relevant as prices of electricity, gasoline, etc. also rose significantly then and consumption trends are generally better now.”
Read: US economic worries lower global oil prices
Impact of diesel prices
The impact of diesel prices on SADAFCO is expected to be small, between SAR6-7 million. That is due to the smaller size of its operations and distribution network. Additionally, SADAFCO makes fewer daily trips per vehicle due to the longer shelf life of its products.
However, other companies like Alamar, Americana, Herfy, and Jahez have relatively high transport costs. Thus, they should see a negligible impact as most delivery vehicles utilize gasoline as opposed to diesel, EFG Hermes stated.
Even at the new high price, diesel is relatively cheap in the kingdom. The UAE set diesel prices for January at 3 dirhams ($0.81) per liter, down from 3.19 dirhams in December, as part of its monthly review of transportation fuel prices.
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