Despite a two-week ceasefire announced between the US, Israel and Iran, oil and gas prices may not fall anytime soon. This is what Financial Times estimates reveal, as the process of transmitting lower costs to consumers can take many months as a result of a range of economic and operational factors.
compensation for losses
The newspaper pointed to the aviation sector as a prominent example of this phenomenon. Aviation fuel prices rose by about 80% during the war, causing airlines to raise ticket prices, impose additional charges on baggage, and increase the cost of services and reservations.
Despite the subsequent fall in fuel prices, these companies often maintain high prices for long periods of time in an attempt to cover losses incurred during the crisis and improve their financial position.
The impact of soaring energy prices is not just limited to transportation, but also extends to the agricultural sector. Farmers rely on diesel and fertilizer to run their equipment, and fertilizer production is linked to gas and energy prices, as well as transportation and storage costs.
inflation pressure
Therefore, even if oil prices fall, the high costs that farmers have previously borne remain on store shelves for a long time, delaying the decline in food prices.
Similar movements are being seen in freight rates, as shipping and logistics companies take longer to reduce freight rates due to long-term contracts, fluctuations in demand, and attempts to recoup past losses. This contributes to the persistence of inflationary pressures even after the initial shock subsides.
Despite a two-week ceasefire announced between the US, Israel and Iran, oil and gas prices may not come down anytime soon. This comes as estimates from the Financial Times show that the process of passing cost savings on to consumers could take many months, due to a combination of economic and operational factors.
compensation for losses
The newspaper pointed to the aviation sector as a prominent example of this phenomenon. As the price of jet fuel increased by about 80% during the war, airlines increased ticket prices, imposed additional baggage fees, and increased the cost of service and reservations.
Despite the subsequent fall in fuel prices, these companies often keep prices high for long periods of time in an attempt to cover losses incurred during the crisis and improve their financial position.
The impact of rising energy prices is not limited to transportation. The problem extends to the agricultural sector, as farmers rely on diesel to run equipment and fertilizer, and production is tied to gas and energy prices, as well as transportation and storage costs.
inflation pressure
Therefore, even if oil prices fall, the high costs previously borne by farmers remain on store shelves for a long time, delaying the decline in food prices.
Freight prices follow suit, as shipping and logistics companies take time to reduce prices due to long-term contracts, fluctuations in demand, and attempts to recoup past losses. This contributes to the persistence of inflationary pressures even after the initial shock subsides.
