The domestic market is following international developments in the oil industry in awe as rates plummet, with projections for the coming weeks remaining uncertain as analysts await June futures to obtain a clearer picture.
Energy Ministry sources describe international conditions in the oil markets as “a very worrying development,” adding that the ministry is in contact with the local market to tackle the consequences. The scheduled surveying in the Greek blocks conceded will proceed, the sources stress, while output at Prinos, in northern Greece, which is just about being sustained, will likely fail to continue if rates decline any further.
For companies in the fuel sector – in refining, trading and retailing – which have suffered a major blow from the slump in demand after the lockdown started in early March, the low oil rates are further squeezing their profit margins, making their battle for survival that much more difficult. The effects on Greek refineries (Motor Oil and Hellenic Petroleum), which are to a great extent export-oriented, will depend on the course of demand in the regional market. Ministry sources have not ruled out the need for targeted measures to support the fuel market, which will be assessed in the coming days.
Hellenic Petroleum chief executive Andreas Shiamishis said developments in global oil markets are “unprecedented,” with rates falling to 30-year lows.
In the long term, however, the consequences for the Greek economy, which is greatly dependent on oil imports, are set to be positive. The low prices will help ease the trade deficit and contribute toward the reduction of inflation. For now, consumers are mostly unable to reap the benefits of the low prices due to the travel restrictions, which have led to a 70 percent decline in demand for gasoline and a 42 percent drop in demand for diesel.
Nevertheless, the low heating oil rates have led many to stock up for next winter, leading to a 90 percent increase this month compared to April 2019.