The retail price of regular gasoline or gasoline 92 (EA92) in the domestic market shot up by 8.64 percent to 4,400 riels or $1.07 per litre on Saturday last week compared to 4,050 riels on the same day in December 2022, according to a statement released by the Ministry of Commerce (MoC). The new price was presented to the market after being discounted from 4,667 riels per litre.
The new price—4,400 riel per litre—was announced after calculations based on the prices in the international markets for the petroleum suppliers and consumers to buy and sell the product from January 21-31, 2023. Earlier, the price had fallen from 4,200 riel per litre to 4,050 riel per litre during the period from December 1 – 21, 2022, said the MoC statement.
The statement pointed out that the price of gasoline 92 in the international market had increased to $104.52 per barrel on January 2023 from $90.24 per barrel on January 11, 2023, which resulted in the average price for this period being approximately $96.40 per barrel and about $0.6 per litre before the new price was presented on Saturday last week.
“It has risen back… We have tracked the market,” Prime Minister Hun Sen said during a groundbreaking ceremony in Kratie province, adding that Cambodia’s economy has been affected by the rising oil price in the domestic market due to the international market as it rose to $85.44 per barrel in the morning of January 2 after it had fallen to nearly $77 per barrel.
The IEA Oil Market Report (OMR) for January 2023—one of the world’s most authoritative and timely sources of data, forecasts and analysis on the global oil market—shows that the global oil demand is set to rise by 1.9 million barrels per day in 2023 to a record 101.7 million barrel per day with nearly half the gain from China following the lifting of its Covid-19 restriction.
However, the report released by the International Energy Agency (IEA) also indicated that the world oil supply growth in 2023 is set to slow to 1 million barrels per day following last year’s Organization of the Petroleum Exporting Countries Plus (OPEC+) led the growth of 4.7 million barrel per day, but the quantity would drop by 870 thousand barrel per day due to expected decline in Russia.
The report also pointed out that two wild cards—Russia and China—dominate the 2023 oil market outlook. This year could see oil demand rise to its highest-ever level, tightening the balances as Russian supply slows under the full impact of sanctions. China will drive nearly half this global demand growth even as the shape and speed of its reopening remain uncertain.
Cambodia’s inflation has risen to 7.85 percent in June 2022 compared on a year-on-year basis to 7.17 percent the previous month, which was the highest in the last decade, due to mainly the increase in the prices of oil and food, according to the National Bank of Cambodia (NBC)—the country’s central bank and monetary authority.
NBC’s Macroeconomic and Banking Sector Development in 2022 and Outlook for 2023 shows that the prolongation of the Russia-Ukraine war remains the reason behind the highly uncertain inflation in 2023. However, in the scenario of the slowdown in the global economy and declining food prices, inflation in Cambodia is projected to decelerate to 2.5 percent.
In Channy, President & Group Managing Director of Acleda Bank Plc—Cambodia’s stock exchange-listed commercial bank, told Khmer Times that the government, as well as the Ministry of Economy and Finance (MEF) and NBC have managed the inflation effectively, which keeps the inflation at not-very-high level—5.3 percent on average in 2022.
“Fuel is a factor of production and so when fuel prices increase, the prices of other services and products will also increase. For example, when the fuel price goes up, the transportation costs will rise,” said Channy of Acleda Bank Plc which has dominated the Cambodia Securities Exchange (CSX) in both overall share price index and full market capitalisation.
Sok Voeun, Chairman of Cambodia Microfinance Association (CMA), also told Khmer Times that somehow inflation contributes to increasing the cost. However, with an interest rate cap, the microfinance industry still lends at a similar price within the cap, while rising cost has been absorbed by microfinance institutions by improving their productivity and efficiency.