Story by Owen Mandovha
PLAYERS in the petroleum sector expect fuel prices to return to normal levels following a breakthrough in negotiations between the United States and Iran, paving the way for a peace agreement expected to be signed in Switzerland later this week.
Global oil prices fell sharply on Monday after officials from both countries confirmed a framework agreement aimed at ending months of conflict and reopening the strategic Strait of Hormuz, a key global oil shipping route.
Brent crude prices dropped by about five percent, reaching their lowest levels in three months.
The deal, which includes re-opening the Strait of Hormuz, a critical passageway for over 10 percent of global oil supply, has been largely welcomed by investors who have seen major global bourses making significant gains.
The development will likely have long-term benefits for the local economy, which, in terms of lower fuel prices, after Government adjusted prices in February in response to the conflict.
Entrepreneur Tendai Mashamhanda anticipates that the deal, once signed, will restore fuel prices to the February pre-conflict levels.
“The likelihood is that prices will go down if this deal materialises, and this is key in terms of normalising the fuel market,” he said.
Government had suspended several taxes on diesel to cushion the industry from high input costs since the start of the conflict- a move that has been welcomed by the industry.
The decline in oil prices has raised expectations of lower fuel costs on international markets, a development likely to bring relief to consumers and businesses that have been grappling with elevated energy prices.
