The price of Brent crude oil dropped below $90 per barrel for the first time since April, while diesel fell under $1,000 per ton. The sudden decline, triggered by US President Donald Trump’s announcement that a peace deal with Iran is imminent, reflects a market that increasingly prices in an end to the conflict.
The sharpest move came after Trump canceled a previously announced wave of strikes on Iran. While the initial threat had pushed oil up by 2.5 percent, the cancellation triggered a drop of over 4 percent. This asymmetric reaction suggests traders are treating positive news as a trigger for larger sell-offs, while ignoring negative signals. Since late April, Brent has lost nearly 30 percent of its value.
Signs that the Strait of Hormuz is not completely blocked also weigh on prices. According to Reuters, three LNG tankers that had turned off their transponders in the Persian Gulf weeks ago have now reappeared, sailing toward Pakistan, India and Southeast Asia.
Polish fuel subsidy program faces early exit
The sustained decline brings Poland closer to winding down its costly fuel subsidy program, known as CPN. The program, which cuts VAT on fuel from 23 to 8 percent and reduces excise duty to the EU minimum, costs around 1.6 billion zloty per month. Current measures expire on June 15, but can be extended by decree until June 30. Beyond that, a new law would be needed.
– We are preparing to gradually exit the program – said Mirosław Motyka, Minister of Energy, adding that the exit threshold is around $80 per barrel, though it also depends on diesel prices in ARA ports. He suggested the process could start earlier due to budgetary pressures.
The revenue shortfall from CPN was supposed to be covered by a new windfall tax on fuel companies, but the project has faced controversy. After consultations, the Ministry of Finance lowered the proposed tax rate from 75 to 60 percent, reducing expected revenue from 4.75 billion to 3.8 billion zloty. Multiple entities, including POPHiN, Instytut Staszica, and PwC, have argued that the tax, which would apply retroactively from March, may be unconstitutional. This raises political risks and may push the government to speed up CPN phase-out.
ECB rate hike and SpaceX record debut
The European Central Bank raised its main interest rate from 2.00 to 2.25 percent in response to inflation driven by the Iran war and fuel prices. The move was expected but contested, as the ECB’s own forecasts show inflation is temporary and eurozone growth remains weak – just 0.8 percent this year. Many economists view the hike as symbolic unless followed by a full cycle. According to Reuters sources, a July hike would require oil to return above $100.
Meanwhile, SpaceX made history on Wall Street. Its IPO of 555 million shares at $135 each raised $75 billion, beating Saudi Aramco’s 2019 record of $29.4 billion. Retail investors alone placed orders worth over $100 billion for the 20 percent reserved for them. The stock starts trading on Nasdaq amid expectations of an initial rally, though analysts caution that the $1.7 trillion valuation leaves little room for error.
Źródło: WNP.PL, Fot. PAP/EPA/JIM LO SCALZO/POOL
