Iran crisis threatens fuel market

The tension between Iran and the West is threatening to deal a fresh blow to the Greek economy. The first consequences are already visible in the price of fuel while fears are growing that there will be more hikes should Tehran go ahead with a ban on oil exports to Greece, too, as it signaled on Monday.

Energy Minister Giorgos Papaconstantinou stated on Monday that Athens?s primary concern is to secure the country?s steady supply of crude through other means, adding that oil from Iran covers about a third of the country?s needs.

Replacing the Iranian oil will not be easy, though, as Greek refineries do not have access to the kind of financing that would allow for an increase in imports from other countries. Even if that were achieved, it would entail a significant increase in fuel rates for consumers and enterprises in Greece and could inflict further damage on the country?s already wheezing economy.

With demand for vehicle fuel (gasoline and diesel) contracting by 18 percent in the first couple of months this year and heating oil demand dropping by as much as 30 percent in Athens and Thessaloniki and by 50 percent in the rest of the country, a further rate hike would immediately signal the closure of many gas stations and subsequently trading companies.

Since the start of the year prices have soared by no less than 11 percent for all types of fuel. The Development Ministry argues that the rise would have been higher if gas stations had not absorbed a considerable part of the price rise from the refineries that was due to the rise of the dollar against the euro and then to the crisis in relations with Iran.

Sources say that gas stations have actually suppressed their profits below 9 cents per liter in order to maintain demand as they rely on it for their survival.

Consumers pay an average of 1.75 euros per liter for unleaded gasoline and 1.05 euros/l for heating oil. The highest prices is to be found on in Crete, at 1.92 euros/l for unleaded gasoline. However the Development Ministry says that there are no price control measures planned yet.