Greece May Extend Diesel Subsidy Amid Rising Oil Prices

Greece's finance ministry is evaluating an extension of the 10-cent-per-liter subsidy on diesel fuel, including VAT, as international oil prices climb. Brent crude is currently trading around $94 per barrel, a level that limits the potential for domestic fuel price reductions.

The current subsidy measure is scheduled to expire on August 31. Final decisions are anticipated next week, just before the measure's end. The rising price of oil, exacerbated by tensions in the Middle East, strengthens the likelihood of the government maintaining its intervention into September.

The aim is to prevent a sharp increase in fuel costs for consumers starting September 1, particularly as people return from summer holidays and increased travel is expected. A rise in diesel prices could also impact the cost of goods and services through transportation expenses.

Data from the Ministry of Development's Liquid Fuels Price Observatory shows the average national price for diesel is above 2 euros per liter, reaching as high as 2.247 euros per liter in the Cyclades. With Brent crude at a three-week high and geopolitical uncertainty persisting, domestic price reductions remain unlikely. Therefore, extending the diesel subsidy for September is considered the most probable scenario.

Additionally, a separate agreement with refineries Helleniq Energy and Motor Oil, which provides discounts of 5 cents per liter on diesel and 10 cents on unleaded gasoline, also expires at the end of August. The combined effect of the state subsidy and refinery discounts currently offers a 15-cent-per-liter relief on diesel. Discussions are ongoing regarding whether the refineries will continue their discounts beyond August. Maintaining both interventions could significantly ease pressure on pump prices.