New economy: The price of oil fell by 25 percent, and the price of fuel in Serbia by seven

In Serbia, world prices are cheaper every season OIL, raises the question why the price of fuel in this country is still among the highest in the region. The short answer was yes - because that's how the citizens voted in the elections. It is unlikely that this (or any) government will change the tax policy when it comes to excise taxes. The reason is simple, the amount of money flowing into budget, and which is then further distributed to what the government at that moment considers to be important public projects, salaries, pensions, loans and all other benefits that are the responsibility of the state, writes the New Economy.

Admittedly, in some states, this problem is solved in a different way, and there are more models, such as the one where families with several household members can receive benefits. But that would imply a functioning system and institutions.

The government introduced new prices that are valid this week, so a liter of Euro diesel is 192 dinars, and a liter of BMB Europremium gasoline will be 179 dinars, which is a slight decrease compared to last week.

"I am coming from a meeting of the Union of Serbian Employers and the Ministry of Finance. They are still working on improving some technical things about e-invoices and the like. Nothing has changed seriously for ten years in terms of fundamental things when it comes to taxation. Most countries have introduced some kind of linear taxation, which means that those who have higher profits pay more, as opposed to those who have less. And I asked at the meeting how they manage to have such lower fuel taxes in North Macedonia and Bosnia. How do they then fill the budget and does the budget have to be filled exclusively from already highly taxed items", says Nebojša Atanacković, the former majority owner of Nafta AD, who adds that he receives little or no response as feedback.

The price of oil will fall to lower levels

He thinks that the price of oil will certainly remain at lower levels in the world, mostly because of the tariffs that US President Donald Trump has introduced. However, as far as Serbia is concerned, fuel prices will not go down until there are serious changes in the tax system, says Atanacković.

This is supported by the trend in the prices of oil and domestic fuel that is poured at the pumps.

In April 2024, the Brent crude oil price ended the month at $87,9. Today, that price is $65,34 per barrel.

Last year, at the beginning of April, the price of euro-diesel in Serbia was 206 dinars, and the euro premium BMB was 95 dinars. Today, euro-diesel costs 193 dinars, and a liter of Europremium BMB gasoline costs 192 dinars.

In other words, although oil has become cheaper by about 25 percent in a year, fuel in Serbia costs only about seven percent less.

In Serbia, excise duties and taxes are "much higher than elsewhere"

Miloš Zdravković, an energy analyst, explains that fuel in Serbia is more expensive than in other countries with a similar position, because excise duties and taxes are "much higher than elsewhere". In our country, as he says, it affects the price the most.

As explained by Raiffeisen Bank, although inflation was slightly higher in February, due to the volatility of oil and food prices on global markets, the local factor that influenced the growth of inflation was the correction of excise taxes. New, higher excise taxes have been in force since the first of February, and the state justifies them as an adjustment to inflation, which brings us to a kind of vicious circle. Higher fuel excise prices will affect all other prices in the country. The excise duty on leaded gasoline is higher by 3,07 dinars and amounts to 74,54 dinars per liter, while for unleaded it was increased from 67,22 dinars to 70,11 dinars as of February 1. The National Bank of Serbia is very well aware of this fact, which is failing to cope with inflation, which is now around a persistent 4,5 percent for the past few months.

Goldman Sachs recently cut its average oil price forecast for 2026 by four dollars for Brent to $58 per barrel, while it forecasts $55 for WTI (US crude). Today, according to the website OilPrice, these prices are 62,12 for WTI and 65,38 for Brent oil.

Zdravković does not agree with this assessment, and notes that we are expecting a big difference between oil prices in Europe and the USA, which used to be somewhere around 1,5 dollars, and now it goes up to 4-5 dollars. He expects that this difference will only increase due to the bad situation in Europe.

"I think it is completely realistic to expect oil next year at $60, especially when we take into account the current geopolitical events and the global macroeconomics. As for Serbia, I am not sure (that prices will go down) because it is still a market with the characteristics of an oligopoly," Mihailo Đurđević, an investment analyst from Senzal Capital, told Nova Ekonomija.

Source: New Economy