Israeli Gasoline Prices Expected to Drop Below 8 Shekels Per Liter Next Week

Fuel prices at Israeli gas stations are expected to be updated next week, with a significant drop anticipated in the price of self-service gasoline to below 8 shekels per liter. However, insiders caution that geopolitical instability, particularly tensions in the Strait of Hormuz, could cause a sharp rise in oil prices, potentially affecting the upcoming fuel price calculation. Assuming the geopolitical situation remains stable, the price is expected to decrease by about 0.25 shekels per liter, reaching approximately 7.84 shekels per liter for self-service gasoline.

A key factor in the pricing formula is the price of crude oil, which has fallen nearly 5% since the last update, currently trading around 85.2 dollars per barrel compared to about 90 dollars previously. Another important element is the exchange rate of the US dollar, which has risen slightly from 2.97 to about 2.99 shekels since the end of June.

Fuel prices in Israel have been volatile in recent months, peaking at 8.07 shekels per liter in May, dropping to 7.48 shekels in July, then rising again to 8.09 shekels in August, the current price. If the forecasted reduction occurs, prices will return to levels seen in June. Fuel prices significantly impact inflation, as energy costs influence overall price levels in the economy. While high oil prices affect inflation through fuel and electricity costs, Israel's electricity prices are less sensitive to short-term energy price fluctuations due to long-term contracts for natural gas from domestic fields such as Tamar, Leviathan, and Karish.