Fuel Prices in Ukraine Are Rising: How Geopolitics, Currency and Winter Are Pushing Costs Higher
Ukraine’s fuel market is entering February under growing price pressure. This is not a sudden spike and not a local problem limited to individual fuel station chains. It is the result of several factors overlapping at the same time: geopolitical tension in the Middle East, higher global oil prices, a weaker hryvnia, and winter-specific demand patterns. Together, they create conditions in which prices for gasoline, diesel and gas have very limited room to decline.
The main external driver is the sharp rise in global oil prices. Throughout January, benchmark crude prices climbed to their highest levels in the past six months. Brent gained 14.7% over the month, marking its strongest January increase since 2022. WTI rose by nearly 12%, its largest monthly growth since July 2023. Even after a slight correction at the end of the month, prices remain elevated. Markets are reacting to escalating tensions between the United States and Iran. The White House administration has publicly increased pressure on Tehran to reach a nuclear agreement while simultaneously holding consultations with allies in the Middle East. Investors are pricing in the risk of escalation even without a formal decision on military action. For the oil market, the mere existence of tension is enough it automatically adds a risk premium.
A separate concern for the market is the Strait of Hormuz. Around 20% of global oil traffic passes through this route. Under a pessimistic scenario involving a blockade or severe restrictions, Brent prices could quickly climb to $80–90 per barrel. For Ukraine, this would mean not gradual but abrupt fuel price growth, with a potential increase of up to 10 hryvnias per liter in a short period. This scenario has not materialized, but it is one the market cannot ignore.
The second key factor is the exchange rate. In January, the hryvnia weakened: the dollar rose by 0.55 hryvnias, and the euro by 1.53 hryvnias. For the fuel market, this is critical. Import contracts are denominated in dollars, while excise duties at the border are paid in euros. As a result, even with stable oil prices, currency depreciation automatically raises fuel costs in Ukraine.
The wholesale market reacted first. Over the past week, the average wholesale price of diesel increased by 43 kopecks per liter, reaching 51.36 hryvnias per liter. Within just a few days, wholesale diesel rose by another 25 kopecks per liter. Gasoline A-95 showed even sharper movement: an increase of 2.25 hryvnias per liter over the week. This reflects both higher oil prices and the currency factor. On global exchanges, diesel-related products are also moving higher. Gasoil in London has risen by nearly 20% since the start of the month, reaching $734 per tonne. This creates sustained upward pressure on diesel prices regardless of short-term corrections. Retail prices are only catching up with wholesale levels. As of January 30, the average price of A-95 gasoline at fuel stations rose by 92 kopecks per liter, to 61 hryvnias per liter, while diesel increased by 76 kopecks per liter, to 60.58 hryvnias per liter. Major fuel networks raised prices by 1 hryvnia per liter, with some regions seeing sharper increases, particularly for winter diesel. This is a typical pattern: retail prices lag behind wholesale trends until increases become systemic.
February, under the baseline scenario, could bring another 2 hryvnias per liter. Market analysts expect gasoline and diesel to rise by around 2 hryvnias per liter during February, without abrupt one-off jumps. Part of this increase may occur in the coming weeks if current conditions persist.
Winter adds its own specifics, especially for diesel. Due to cold weather, demand for standard diesel grades remains subdued, while demand for arctic diesel has risen sharply. These fuels are imported mainly from the United States, and volumes are limited. As a result, prices for arctic diesel are rising faster than for standard products. This pushes average diesel prices higher even amid weaker overall demand. Liquefied petroleum gas is rising differently. Wholesale LPG prices increased following higher quotations from the Algerian company Sonatrach: propane rose by $25 per tonne, and butane by $5 per tonne. In Ukraine, this led to higher wholesale prices, but at fuel stations gas prices increased by only 11 kopecks per liter over the week, to 38.23 hryvnias per liter. Low seasonal consumption is restraining retail prices, and no sharp changes are expected in February.
The overall picture is this: Ukraine’s fuel market is in a phase of controlled price growth, but it is highly dependent on external developments. For now, prices are rising gradually, responding to oil markets and currency movements. However, in the event of a sharp geopolitical escalation, the pace of increases could change very quickly without any room for a smooth adjustment.
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