Israeli Fuel Prices Set to Rise by 35 Agorot in August Amid Global Supply Strains

Fuel prices in Israel are expected to increase significantly in August, rising by 35 agorot per liter, according to data from the Bazan oil refinery and analysis by BDO's chief economist, Chen Herzog. The current price for self-service fuel stands at 7.48 shekels per liter and is projected to reach 7.83 shekels, still below the May peak of 8.07 shekels but notably higher than recent years' averages. The final price will depend on the average fuel price and the dollar exchange rate at the end of the month.

The price hike is driven by three main factors: a sharp rise in Brent crude oil prices from $73 to nearly $100 per barrel, an increase in refining margins from $44 to $46 per barrel, and a stronger dollar rising from 2.98 to 3.08 shekels. Herzog attributes the price surge to renewed tensions in the Hormuz Strait and the collapse of a US-Iran ceasefire, which have pushed crude prices higher and worsened refining margins due to damage to Russian refineries.

Dr. Ilan Gildin, a hedge fund manager and family office partner, explains that Ukraine has destroyed 40 to 50 percent of Russia's refining capacity, with Russia supplying over 10 percent of the world's diesel. This has triggered a global refining crisis, as rebuilding refineries is a long-term process taking up to a decade, and new refineries are rarely constructed due to their complexity and location challenges.

These combined factors suggest Israeli consumers will face higher fuel costs imminently, reflecting broader global supply disruptions and geopolitical instability affecting oil markets and refining capabilities.