Changes in fuel prices never go unnoticed – almost all households in the Greater Malé area own one or more vehicles. Even though 99% of our country is the ocean, we may have missed the change in the price of sea transport tickets. Some of us may have travelled to islands a while back, for Eid al-Adha, via ferries. They may have noticed a significant hike in the price of tickets. With an average increase between MVR 100 and MVR 200, and some fares even doubled. Noticeably, most ferries raising fare rates travel from Malé to Central and Northern Atolls.
Why the sudden hike in ticket prices?
One reason for the significant increase in ticket fares may be the increase in demand for ferry travel during Eid and school holidays. A large number of families travel to different islands while others travel to Malé, resulting in peak season for ferry travel. The other, and perhaps most obvious reason, is due to the increase in fuel prices in the international market caused by the ongoing Russia – Ukraine war, which continues to severely affect the international fuel market.
The current price for a litre of petrol sold from STO is MVR 16.55, which is an MVR 1.95 increase since the price changed last month, and diesel is at MVR 16.77, an MVR 1.97 increment per litre compared to early June. The selling price for companies has increased from MVR18 to MVR20 per litre. Fuel prices have increased around the world in recent months with the price of crude oil in the international market reaching between USD 100-115.
In the Maldives, fuel prices in some parts of the country are high due to a lack of direct lines of transport from Fuel Supply Maldives (FSM) vessels. Additional logistics and transport fees make fuel more expensive in these areas than in other parts of the country. FSM is reportedly working on mechanisms to provide fuel directly to all areas of the Maldives.
How does the Russia-Ukraine war affect shipping and fuel rates?
The Russian Federation is not only a grain exporter but also a leading global oil and gas exporter. Ukrainian ports closed following the invasion and global powers imposed trade restrictions on Russian fuel exports in response. The United Nations Conference on Trade and Development (UNCTAD) in a recent report entitled “Maritime trade disrupted: the war in Ukraine and its effects on maritime trade logistics” published on 28 June, states “confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon,”
According to the report, the increase in fuel price also affects shipping costs for all maritime transport sectors globally. Furthermore, the report highlighted that the global average price for very low sulphur fuel oil had increased by 64% by May 2022 since the beginning of last year.
Will the fuel rates keep increasing in the future making tickets more expensive?
Although the prices of fuels have been increasing over the past months, there has been a decline in fuel prices in the global market over the previous days. The price of gasoline is currently at less than 100USD a barrel.