Cypriots have been trapped in the vortex of two war conflicts and the side effects they trigger in the last four years. The first energy hit came in 2022 with the Russian invasion of Ukraine, when the price of gasoline had "flown" to €1.82 and diesel to almost €2, setting a historical record.
Since then, prices have been maintained at high levels, despite the good moments of de-escalation, with the price of diesel reminiscent of déjà vu and gasoline still having a distance to cover.
Four years later, a new cyclone, that of the US-Israeli operation in Iran, shook the waters again, leading retail prices to new adventures in the last six months. As the data of the Consumers' Association testify, since the beginning of the military strikes in Iran, the price of gasoline has increased by 29.2 cents per liter (22.2%) and diesel by 45 cents per liter (31.8%).
The increases occurred in two waves, but March was the milestone that "loaded" most of the increase on consumers. Within 26 days, the price of gasoline had skyrocketed from €1,315 per liter to €1,522 per liter and diesel, which is still under stronger pressure, from €1,413 to €1,764 per liter.
The government's decision to reduce the tax relief of 8.3 cents per liter in April acted as a bulwark, but failed to cancel the impetuous international pressure.
The second wave of price increases began to take shape in mid-July, reversing the de-escalation of the previous months. From July 16 to September 2, gasoline added 13.5 cents per liter and diesel 28.3 cents, with prices standing at €1,607 for gasoline and €1,863 for diesel.
In the face of the ongoing pressure on fuel prices, the Government is oriented, however, towards a new extension of the reduced taxation on motor fuels, as the existing regulation expires on September 17.
The Minister of Finance, Makis Keravnos, announced during the week his intention to submit to the Council of Ministers a proposal for an extension of the reduction of tax rates on motor fuels until November.
Acknowledging that developments in energy maintain a negative sign and continue to put pressure on households, he pointed out that, with the expiration of the extension, the data will be reviewed to decide whether a new renewal will be needed.
Supply is normal
Despite the geopolitical crisis in the region, no problems in fuel adequacy in Cyprus have been recorded so far, according to the vice president of the Association of Gas Station Owners, Christodoulos Christodoulou, who spoke to KYPE.
As he mentioned, the companies respond normally to the orders of the gas stations and assure that there is no problem in the supply.
Cyprus imports fuel from Greece and Israel, with the ongoing geopolitical tension not affecting the relevant supplies so far. Despite the price increases, consumption during the holiday period remained at about the same level as last year, as travel was increased. Mr. Christodoulou noted, however, that there is an increased transition to the occupied territories for the purchase of fuel, which he attributed to the higher prices in force in the free areas.
Increased profits for refineries
European gasoline refineries' profit margins topped $62 a barrel on Wednesday, according to trade data reviewed by Reuters.
According to the agency, Eurobob E5 gasoline barges were trading at a premium against Brent futures of about $62.07 per barrel, up from a premium of $55.62 on Tuesday. At this level, European gasoline is trading just below the historically high Eurobob E5 gasoline profit margins of $62.10 achieved in June 2022, at the peak of oil price shocks since the start of the war in Ukraine, according to LSEG data.
"Rising strikes at refineries in the Middle East and Russia have further curtailed already limited global refining capacity, pushing refined product profit margins to new highs," Goldman Sachs analysts said in a note last week.
European gasoline refining profit margins have been further boosted by low inventories at the Amsterdam-Rotterdam-Antwerp (ARA) commercial and storage hub, with low water levels having curtailed barge inflows along the Rhine, exacerbating already limited supply in the Atlantic basin, said Janiv Shah of consultancy Rystad Energy. ARA gasoline inventories were at their lowest point since September 2021 last week, at just 752,000 metric tons, according to data from Dutch consulting firm Insights Global.
