SMILES OF HOPE FOR TOURISM - ANXIETY ABOUT THE FINAL US-IRAN AGREEMENT - Filenews 17/6 by Angelos Angelodimou
The return of the economy and markets to normality is the big bet that arises after the announcement of the interim 60-day agreement that is expected to be signed the day after tomorrow Friday between the US and Iran.
The sharp decline in oil prices creates optimism that economic activity will return to normal. However, this may take time, as some parameters that have arisen after the war conflicts are not expected to be resolved soon. At the same time, optimism is returning to the tourism industry for a recovery in last-minute bookings and an increase in arrivals.
In particular, yesterday Tuesday oil prices were trading below $80 per barrel. The possible opening of the Strait of Hormuz, combined with the rise in the shares of several companies, especially airlines, have boosted the feeling of optimism in the markets. It is the first time Brent has traded below $80 since March 3, a few days after the start of the war with Iran. Brent is now down 37% from the intraday high of $126.41 it recorded on April 30, analysts said yesterday.
What OEB says
Speaking to "F", the General Manager of OEB, Michalis Antoniou, said that if the ceasefire agreement is finally signed and respected, it is expected to contribute to the restoration of the sense of security and the return of the economy to normality. Inflationary pressures will ease, energy costs will fall and transport will return to a more normal flow. At the same time, the truce in the war conflicts is expected to help significantly in strengthening tourist flows, added Mr. Antoniou.
As he pointed out, the reduction in fuel prices is expected to have a significant effect on reducing the cost of airlines, with the possibility of a reduction in ticket prices being visible.
Of course, both the General Manager of OEB, as well as international analysts, emphasize that all this is not expected to occur immediately. And this is because certain factors may make it difficult to try to bring the whole situation back to normal.
Specifically:
(a) China, all this time, avoided buying fuel due to high prices and used up its reserves. Now, however, it is expected to restart purchases to restore the quantities it used. As a result, oil production will increase, but at the same time demand will increase, so that prices will not fall to levels that might otherwise have been reached.
(b) Due to the war, significant damage has been caused to production facilities in the Middle East. Given the time required to rebuild factories and warehouses, it could take months to restore the flow of oil to pre-war levels. "We see 50% of production returning by September and 80% by December," Morgan Stanley analysts said.
(c) A major issue concerning the resumption of ship services through the Strait of Hormuz concerns the clearance of the sea area from Iranian mines. Specialized ships that can carry out demining work are usually slow and lack defensive weaponry, which makes them vulnerable to attack, an official said, according to Bloomberg.
How does PASYXE comment?
Regarding the part of tourism, which "burns" the Cypriot economy, the General Director of PASYXE, Christos Angelides, particularly focused on the point of strengthening the sense of security in the region, which expressed the hope that it will contribute to the increase of tourist flows.
Speaking to "F", Mr. Angelidis noted that the lost months are not expected to be regained and therefore we should necessarily rely on last-minute bookings. But this, he added, does not depend exclusively on us. Both Spain and Portugal have attracted a large number of tourists this year. We hope, he noted, that at some stage they will not be able to absorb all the flows and therefore some tourists will turn to other destinations, including Cyprus.
He also pointed out that in addition to the July-September quarter, the months of June, October and to some extent November have proven to be quite efficient in recent years and there is hope that this will continue this year, in the event that a ceasefire finally prevails in the area.
