The sharp increase in the price of natural gas and oil on world markets due to the military escalation in the Middle East is starting to be felt in Europe. Effects on the Bulgarian economy are also possible – especially on the prices of fuels, electricity for businesses and some goods. This was commented on “This Morning“ by the energy expert from the Center for the Study of Democracy Martin Vladimirov.
In his words, both oil and natural gas are reacting strongly to the military situation. “Both raw materials have effects on the Bulgarian economy and Bulgarian consumers will probably see an increase in fuel prices“, Vladimirov pointed out.
According to him, the price depends on the situation around the Strait of Hormuz – a key route for global oil and gas supplies. “Everything depends on how long the Strait of Hormuz will be blocked. If traffic is restored, markets can quickly calm down“, he explained.
“Europe is in a very difficult situation because it has to import large quantities of liquefied natural gas to fill its storage facilities for the upcoming spring-summer season. There are requirements to maintain minimum quantities in storage facilities. A more serious increase in the price of natural gas can be expected from May 1“, the expert explained.
Bulgaria is partially protected by the long-term supply contract from Azerbaijan, but even there the price is tied to oil, which is also rising in price. “The price for April will probably not be greatly affected, but from May 1 we may see a more serious increase in the price of natural gas in our country“, Vladimirov predicts.
The increase in gas prices will also affect electricity in Europe, because gas plants often determine the final price on the market. Although Bulgaria produces a small part of its electricity from natural gas, prices on the common European market are also transferred to our country.
This means that the industry may feel an increase in the price of electricity, while households remain protected for now, as they pay regulated prices.
The effect can be felt relatively quickly at gas stations. “If the situation persists, we may see an increase in fuel prices by about 10-15 euro cents per liter“, the energy expert predicts. Currently, the “Brent“ variety is trading around $85 per barrel, with markets reacting to any news from the region.
According to Vladimirov, a serious inflationary effect will only occur if high prices persist for a longer period of time. “If fuel levels remain high for a long time, this will also be passed on to commodity prices. At this stage, however, it is too early to talk about a significant jump in inflation“, he pointed out.
The energy expert stressed that the world market actually has sufficient quantities of oil and gas. “If traffic through the Strait of Hormuz is restored, prices could fall relatively quickly because there is a surplus of these raw materials“, he explained.
Currently, however, about 20 million barrels of oil per day from the Persian Gulf region remain blocked – a factor that continues to keep markets tense.