Cyprus is getting more and more involved in the maze of the energy crisis, as a new frenzy prevails in retail fuel prices, with the price of diesel exceeding €2 per liter, while new increases are to follow within the week.
Retail prices of petroleum products are moving in the opposite direction from the - perhaps temporary - de-escalation recorded yesterday in international crude oil prices. 95-octane gasoline reached €1.70 per liter at the pumps, while heating oil also increased by an additional three cents, to reach €1.565 per liter and record a new all-time high.
And a new round of increases
The Representative of the Gas Station Owners, Christodoulos Christodoulou, speaking on the show "Alpha Good Morning", said that a company has already announced new increases, while similar announcements are expected from other companies, either today or tomorrow. He even warned that there is likely to be a second round of increases within the same week, noting that no one can know at the moment where the upward trend will stop.
October is also "hot"
A domino effect of increases in basic goods is expected from October, as energy costs and freight rates rise. In his statements to "F", the president of the Consumers' Association, Marios Drousiotis, pointed out that "the increases in energy prices of the last fortnight will be passed on to other products and services around mid-October".
Increases in retail trade have been recorded for many weeks, as inflation in Cyprus follows a continuous upward trend and is one of the highest, as only Lithuania had higher inflation than Cyprus in August.
Referring to fuel prices, Mr. Drousiotis expressed the estimate that within the coming week the price of diesel may break the barrier of the all-time maximum price (4 cents short of today's price for this to happen).
Since the declaration of war in the Middle East, the price of 95-octane gasoline has increased by 36 cents per liter, diesel by 53 cents per liter and heating oil by 61.4 cents per liter.
This winter will be tough on households, especially in mountainous areas, as the price of heating oil increased by three cents per liter (€1,565/liter), surpassing the all-time high, set in July 2022, shortly after the outbreak of the Russian-Ukrainian war.
More than 300 months
The EAC is taking a wait-and-see attitude for the time being, as electricity prices are adjusted on a monthly basis. As EAC spokesperson Christina Papadopoulou explains to "F", for the month of September the charge amounts to 30 cents per kilowatt hour, including VAT. A family of four without rooftop photovoltaics is not expected to receive a bill of less than €300 for the two months of August – September, given the increased use of air conditioners.
The EAC monitors geopolitical developments and the formation of international prices, but it remains unknown for the time being whether there will be increases in the price of electricity from October. According to Ms. Papadopoulou, the EAC has pre-purchased a quantity of emission allowances (CO2) at low prices, creating a "cushion", which it could use in the energy mix, so that it is able to absorb part of the increases.
AKEL shouts
AKEL unleashes insults against the government, accusing it of remaining almost uninvolved in the effects of the crisis in the Middle East and the burden on households.
The opposition party considers that the extension of the reduction of the excise tax is not enough and calls for immediate additional measures. Particular emphasis is placed on the demand that the European Union demand an end to the imposition of VAT on excise duty. He also calls for stricter price controls, transparency in profit margins and targeted support for travel and heating oil, arguing that the required fiscal space exists.
International prices in decline
However, the international price of Brent, which was trading below $100 per barrel yesterday, moved in the opposite direction in the last 24 hours, as markets hope for a de-escalation of tensions in the Middle East. The decline in prices is visible on the boards, but it is weak and may prove to be temporary, since fluctuations are very frequent. Brent crude was at $99.86 a barrel and US West Texas Intermediate (WTI) at $95.31, the lowest levels in 11 days.
Economic analysts attribute the decline to expectations of possible diplomatic progress between the United States and Iran, but also to the recovery of Saudi exports. Aramco has increased flows through the Strait of Hormuz, curbing fears of an immediate shortage of supply for the time being.
Another sky in Europe
Despite yesterday's decline in international oil prices, the picture in Europe remains clearly more difficult. The problem is based on the shortage of supply, but also on the reduction of European stocks.
Saudi Aramco has informed European refineries that it will not deliver Saudi crude in October, with the decision, according to Bloomberg and Reuters reports, affecting all European buyers. Refineries are already looking for alternative quantities, in an environment of strong uncertainty.
We ran out of stocks
According to Reuters, the global diesel market remains in severe tightness and the situation will hardly normalize before 2027.
The wars in Iran and Ukraine have curtailed significant flows from the Middle East and Russia, driving inventories to very low levels and keeping prices high. In Europe, stocks at the Amsterdam-Rotterdam-Antwerp hub were 16% below the five-year average in July. Reuters notes that a new escalation of conflict, an extension of Russian restrictions or a serious damage to a refinery could cause a new wave of price increases.
At the same time, the overall pressure on the European energy market is also fuelling scenarios of a possible revision or relaxation of the decision to completely ban Russian gas, but so far there has been no official position on this from Brussels.
