Swiss heating oil buyers face winter order rush as prices climb

Swiss public broadcaster SRF reports that heating oil prices are nearing their highest levels since the war in the Middle East began, raising fears that many homeowners will place orders at the same time before winter.

Heating oil currently costs about 1.60 Swiss francs per litre, depending on the order size, compared with around 1.10 francs in mid-June. That represents an increase of about 45 percent in two months.

The market has been affected by the US attack on Iran and the temporary blockade of the Strait of Hormuz. Despite the approaching winter, demand has remained subdued, according to Paolo Righetti, president of Swissoil Ticino, who spoke to RSI, the Italian-language Swiss broadcaster.

“The market has been practically at a standstill for six months,” Righetti said. He expects customers will soon have to order heating oil regardless of the price.

Suppliers warn of delivery delays

Many customers have held off in the hope that prices will fall. If they now place orders simultaneously, suppliers could face a logistical bottleneck, Righetti warned. Customers may have to expect longer waiting times or order early.

Righetti said prices could rise further because the market is highly sensitive to geopolitical developments. In the long term, he expects prices to fall once the situation in the Middle East calms, but he said the timing was impossible to predict.

Suppliers are also under pressure because they generally secure the required quantities at the current market price when customers place orders. Buying larger volumes in advance would involve significant risks, Righetti said.

Supply constraints affect other fuels

The Federal Office for National Economic Supply said a technical failure at the refinery in Cressier, in the canton of Neuchâtel, is currently affecting supplies of petroleum products. Low water levels are also restricting transport on the Rhine.

As a result, the delegate for national economic supply authorised the temporary release of mandatory reserves. Between September 8 and 20, up to 30,000 cubic metres of diesel and 30,000 cubic metres of petrol may be released.

The federal government said there are currently no supply problems for heating oil. It added that lower prices on the world market would be passed directly on to customers.

Righetti said releasing the reserves was also helping to stabilise prices. He described the energy markets as exceptionally unstable, noting that diesel prices rose by about 100 dollars per tonne between the beginning and end of August, with daily fluctuations of 40 to 50 dollars often driven by new developments in the Middle East.