Fuel Prices Are Falling: Expert Explains Why the Drop Is So Slow in Ukraine

The long-awaited drop in fuel prices at Ukrainian gas stations is finally gaining momentum. After months of relative stability, networks began lowering prices for gasoline, diesel, and autogas in mid-March. However, this decline has its own specificities and risks that prevent prices from falling as sharply as they could. For global energy market observers, the situation in Ukraine serves as a case study of how wartime economics, taxes, and consumer behavior can distort the typical correlation between global oil prices and local retail costs.

Numbers at the Pumps Are Creeping Down

According to monitoring data, from March 13 to 20, average retail prices at gas station networks fell by 58 kopiykas to 1 hryvnia per liter. As a result, a liter of A-95 gasoline now costs an average of 55.71 UAH (approx. $1.55*), and diesel fuel costs 54.06 UAH. Autogas saw a more modest drop of 28 kopiykas, to 36.32 UAH per liter.

This drop is logical and linked to global market dynamics. As reported by Bloomberg, from January 15 to March 20, 2025, the price of Brent crude oil futures fell by 12% – from $82 to $72 per barrel.

“Oil has fallen, they [gas station networks] should have reduced the price, but they are afraid that something else might happen and the retail business would suffer significant losses. The math shows that they can move [reduce the price], but the economics shows that there is no need to rush,”

explains Oleksandr Sirenko, an analyst at the consulting company “Naftorynok”.

Potential Exists, But There’s a Catch

According to the expert, against the backdrop of a 10% or more drop in oil prices, fuel has the potential to become cheaper by approximately 5 hryvnias per liter (approx. $0.14). This means the current one-hryvnia drop is just the beginning.

This is also confirmed by the disproportion between wholesale and retail prices. As of March 20, the average wholesale price for diesel fuel in Kyiv and the region was 45.9 UAH/l, while at gas stations it sold for an average of 54.57 UAH/l. The difference of 8.6 hryvnias clearly indicates room for further reductions at the pumps.

What’s Preventing Prices from Falling Faster?

Oleksandr Sirenko names three key reasons forcing gas station networks to act cautiously:

1. Sales Collapse. Due to the war and related factors—mobilization, people leaving the country, reduced mobility—fuel sales have fallen significantly. “There are fewer people… people avoid unnecessary travel,” states the expert. To cover fixed costs amid falling turnover, businesses are forced to maintain a higher margin per liter.
2. Tax Risks. Over the past six months, the excise tax on petroleum products has been increased twice—in September 2024 and January 2025. Furthermore, since December 1, 2024, a regulation has been in effect obliging networks to pay profit tax in advance (60,000 UAH per station, approx. $1,667). These changes add uncertainty about the future and do not incentivize sharp price cuts.
3. Marketing Instead of Real Reductions. Businesses have found another way to attract customers.

“In the last six months, there have been 6-7 ‘Black’ Fridays, something that has never happened before. The practice of lowering prices for weekends is also widespread,”

notes Sirenko. Thus, networks simulate activity without lowering prices on a permanent basis.

What’s Next?

The expert’s forecast is twofold. On the one hand, the mathematical potential for a 5-hryvnia per liter drop is a reality. On the other hand, the economic logic of a business bearing enormous risks and operating in a shrunken market will hinder this. Most likely, we will witness a wave-like, cautious decline in prices, accompanied by active marketing campaigns.

As reported earlier by the publication “RBC-Ukraine”, a trend towards cheaper fuel was already emerging in February, and experts expected it to continue in March. It has now materialized, but its scale does not yet correspond to the drop in oil quotations.

*Exchange rate as of 21.03.2025: ~1 USD ≈ 36.00 UAH. Brent oil price is based on Bloomberg data.