Brent Falls Below $98 as Pakistan and China Push Iran Talks
Brent crude fell to around $98.4 a barrel, lower for a second day, as Pakistan, backed by China, tries to revive talks between the US and Iran. What does it mean for fuel prices and inflation in Serbia?
- Brent crude fell to around $98.4 a barrel, a daily drop of about 2.3%.
- The trigger: Pakistan, backed by China, is trying to revive talks between the US and Iran.
- Even after the drop, Brent is still roughly 30% higher than a month ago.
- Forecasts still see the price above $100 by the end of the quarter.
Brent crude fell to around $98.4 a barrel, down about 2.3% on the day and lower for a second straight session. The market is reacting to a diplomatic signal from an unexpected direction: Pakistan, backed by China, is trying to revive negotiations between the United States and Iran.
For weeks, oil has carried a risk premium tied to Middle East tension. Any hint of de-escalation strips that premium away, and that is exactly what the market is now pricing in. When the odds of a supply disruption through the Strait of Hormuz, which handles a large share of the world’s seaborne crude exports, start to fall, prices respond immediately.
The context still calls for caution. Brent remains roughly 30% higher than a month ago, which makes this move a correction within an uptrend rather than a reversal. Forecasts circulating in the market still put the price above $100 by the end of the quarter, assuming the talks fail to produce a lasting result.
Who gains and who loses
A lower crude price directly cuts costs for energy importers and for refineries that buy oil on the world market. On the other side sit exporters in the Gulf and Russia, for whom every dollar off the price thins the margin per barrel and trims export revenue.
For Serbia, which covers most of its oil and refined product needs through imports, a lower input price is welcome news. Domestic fuel prices are set at regular intervals and tied to world market moves, so the effect of a decline, if it holds, reaches the pumps with a lag of several weeks. Fuel is also one of the fastest items to feed into inflation, through transport and the cost of goods along the supply chain.
How much will Serbian drivers feel it?
In the short term, very little. Pump prices do not track hourly swings on the exchange; they are adjusted periodically, so one or two days of decline are not enough to change the price list. For a 2.3% drop to show up at the tank, the trend would have to hold for several weeks without being undone by a fresh spike.
Then there is the currency factor. Oil is priced in dollars on the world market, so the final cost for a local consumer also depends on where the dinar and the euro stand against the dollar at the moment of calculation. A strong dollar can cancel part of the benefit of cheaper crude, while a weaker dollar amplifies it.
The open question is durability. Diplomacy can flip market sentiment for a day, but the price is held over time by fundamentals: output volumes, inventory levels and demand. If the US and Iran talks take concrete shape, the risk premium will keep melting away. If they turn out to be another failed attempt, a price of $98 could quickly be behind us.
Do you expect the drop in crude to reach the pumps at home, or will the exchange rate and regulated prices eat up most of the saving?
