Fuel Prices in Israel Expected to Drop by 25 Agorot in Early September

Israeli drivers may soon see relief at the gas pump as fuel prices are expected to decrease around September 1. After recently surpassing 8 shekels per liter, prices could fall to approximately 7.80 shekels per liter, marking a drop of about 25 agorot. This anticipated reduction follows a global decline in oil prices, which directly influences gasoline costs in Israel.

However, the decrease in fuel prices in Israel is expected to be moderate compared to the global drop due to the high tax component, including excise and VAT, embedded in the local fuel price. The recent spike above 8 shekels was driven by geopolitical tensions in the Middle East, which raised concerns about energy supply disruptions and caused volatility in oil markets.

Satu Oren, CEO of Oren Finance, explained that while the falling oil prices in the U.S. will contribute to lower fuel costs domestically, the tax burden limits the extent of the price reduction at the pump. Oren also noted that lower energy prices could have broader economic benefits, such as reducing transportation and production costs for businesses, potentially easing inflationary pressures.

The aviation sector might also benefit from sustained lower fuel prices, as fuel is a significant expense for airlines, though ticket prices may not immediately reflect these savings. Additionally, the electricity sector could see medium-term advantages depending on the energy sources and fuel costs used for power generation.

Ultimately, the key figure for consumers will be the fuel price on September 1, which, if projections hold, will offer some financial relief after the recent sharp increases.