Oil Prices Drop Globally, Yet Gasoline Prices Remain Unchanged in Armenia: What Is the Reason?

In Armenia, fuel prices decrease very slowly, while they rise rapidly. This is due to the dominance of a few companies in the market that essentially manage or control the entire sector. Economist Suren Parsyan made this statement in an interview with Sputnik Armenia, commenting on the decline in global oil prices and the unchanged prices of gasoline in the Armenian market.

Globally, oil prices have fallen to $65 per barrel. However, the Armenian market does not respond to these changes. In Armenia's gas stations, the price of Regular gasoline per liter has been unchanged at 480-490 drams over the past month, while Premium gas ranges from 500 to 510 drams. For comparison, today's gasoline prices are comparable to those in January 2022 when the global price of oil was $91 per barrel, and the exchange rate of the dollar during that time, according to the historical data of the Central Bank of Armenia, was about 482 drams (today, the exchange rate according to the Central Bank is 390.68 drams per dollar).

“Importers also control retail sales by dictating pricing policies in the retail sector,” said Parsyan, adding that in this situation, it is no coincidence that the local market reacts very quickly to increases in the global market or the rising exchange rate of the dollar, while it does not respond to price drops.

He considers the increase in transportation and logistics costs for imported goods, including gasoline, as an objective reason for the situation. On the other hand, according to the economist, importers create certain “safety cushions” for themselves to safeguard against potential fluctuations in the exchange rate.

Regarding future forecasts, not only Parsyan but also international experts and analysts point out the potential impact of upcoming geopolitical events on global oil prices. If the US-Iran negotiations provide positive signals to the global economy, then the new tariff rates announced by US President Donald Trump have raised certain concerns, leading to a decrease in global economic activity and investments, which in turn has resulted in a drop in oil demand and, consequently, a decrease in oil prices.

“If Trump’s negotiation process continues and tariff rates with different countries are revised, then oil prices could rise again,” Parsyan suggests.

In the Armenian market, he believes that gasoline prices will largely depend on market players in dominant positions and the actions of the competition protection commission. “I think it is possible that our economic operators will make certain adjustments to prices considering various factors. But let’s not forget that other factors may emerge. For instance, the exchange rate could rise tomorrow, and they might not revise gasoline prices. In other words, other factors also affect their behavior. At this moment, it is impossible to make definite predictions,” the economist concludes.