If you thought last Friday's news of drastic drop in fuel prices was due to the kindness of the newly appointed government, think again, because these prices are actually a cause and effect of a fuel price war going on somewhere else in the world.
It was announced today that the world's fuel price has crashed as much as 30 per cent, driving crude prices to its lowest in nearly half a decade.
The cause of all this turmoil is actually a Saudi Arabia VS Russia problem. Long story short, they were friends, and now they are not. They are part of the alliance called Opec+, which stands for the Organisation of the Petroleum Exporting Countries. Every type of decision with regard to fuel was made collectively with other Opec+ countries.
Due to the coronavirus, demand has hit an oil time low for fuel, hence Saudi Arabia suggested to the other OPEC+ members to curb the production of fuel in order to control its price but Russia didn't want to play ball as it would in turn benefit the American Shale industry. So what did the Saudi's do? Be a child of course.
The Straits Times reported " Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its Opec+ alliance with Russia amid a coronavirus shock to demand."
This action by the Kingdom is supposedly a game of chess in order to renegotiate terms. "The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to bring them back to the negotiating table, and then quickly reverse the production surge and start cutting output if a deal is achieved."
While this drastic drop in price has brought joy to Cayenne, Range Rover or any big CC vehicle owner, they have brought in turn brought tears to Malaysian fuel dealers. The STAR reported that PDAM (Petrol Dealers Association Malaysia) wants a change in the Malaysian fuel policy as the current one will hurt dealers badly. " PDAM president Datuk Khairul Annuar Abdul Aziz said that while the cheaper fuel is welcomed by the public, petrol dealers would have to sell fuel at a loss. He said this was because the previous government administration wanted to limit the price increase quantum to one to two sen weekly, to avoid inflation."
The implication for vehicle owners
Well, there are no negatives here. This will be the best time to drive the roads of our beautiful country and use some premium fuel while you're at it. RON100 anyone? Since it will also be the school holidays this weekend, enjoy the gift of low fuel prices and take your family on that well earned holiday.