Diesel has exceeded 2 euros. Fuel prices are rising again.

Fuel prices in Cyprus are rising sharply again. At the most expensive stations, a liter of diesel fuel now costs over €2, 95-octane petrol has approached €1.70, and the average price of heating oil has risen to €1.565 per liter, setting a new record.

This likely isn't the end of the price increases. One fuel company has already announced another price change, and other importers may make similar decisions. Industry representatives aren't ruling out two price increases in one week.

Diesel over 2 euros at the most expensive stations

Crossing the €2 mark doesn't mean diesel costs the same at every station. Prices vary depending on the company, location, and specific point of sale.

However, the highest rates have already exceeded the psychological threshold of €2 per liter. The average diesel price remains about four cents below the historic high set in 2022, but further announced increases could quickly narrow this gap.

95-octane gasoline costs around €1.70 per liter at some stations. Since the start of the current crisis in the Middle East, its price has increased by a total of around 36 cents.

The increase is even greater for diesel, which has gone up by around 53 cents per litre.

Record price of heating oil

The most worrying situation concerns heating oil. Its price has risen another three cents to €1.565 per liter.

This is higher than the previous price peak in July 2022, shortly after the Russian invasion of Ukraine began. Since the start of the current crisis, the price of heating oil has already increased by about 61.4 cents per liter.

The effects will be felt most acutely by residents of mountain towns where oil is used to heat homes in winter. Even a relatively small supply now represents a significant expense.

At a price of €1,565:

• 200 liters costs 313 euros,
• 500 liters costs 782.50 euros,
• 1000 liters costs 1565 euros.

For many households, fully refilling the tank before winter can mean a one-time expense of over one thousand euros.

Further rate hikes may come this week

The representative of gas station owners, Christodoulos Christodoulou, reported on the "Alpha Kalimera" program that one company has already provided information about new increases.

Other importers may announce price changes in the coming days. A second price change is also possible later this week.

However, it's unclear exactly how much prices will increase or whether all companies will introduce increases at the same time. Therefore, individual station prices may vary even further.

Drivers filling up large quantities of fuel should compare prices before visiting the station. A difference of five cents per liter translates to €2.50 for a 50-liter tank.

Why is fuel becoming more expensive when oil is cheaper?

In recent days, the price of Brent crude oil has fallen below $100 per barrel, raising the question of why drivers aren't seeing any reductions at Cypriot gas stations.

Cyprus does not have an operating refinery and does not import crude oil for local processing. Instead, it imports finished products, including gasoline and diesel fuel.

Their prices depend on refined fuel prices, delivery costs, product availability, exchange rates, stocks and the terms under which importers concluded previous contracts.

A drop in oil prices doesn't necessarily mean cheaper gasoline or diesel. There's also a lag between the change in the international market and the delivery of fuel to the island.

Europe has dwindling diesel reserves

The problem is not limited to Cyprus. The European diesel market remains under pressure due to limited supplies and low stock levels.

Diesel stocks in the Amsterdam, Rotterdam and Antwerp regions were about 16% below the average of the previous five years in July, according to data cited by Reuters.

The situation is exacerbated by conflicts in the Middle East and Ukraine, restrictions on Russian products and supply problems to European refineries.

Saudi Aramco also reportedly informed European customers that it would not supply them with Saudi crude in October. Refineries are seeking alternative sources, which could increase purchasing and transportation costs.

Analysts cited by Reuters estimate that the tense situation in the diesel market could persist until 2027. Any further supply cuts or failure of a major refinery could trigger another price increase.

More expensive transport will translate into prices in stores

Rising fuel prices increase the costs of transporting products, courier companies, agriculture, construction and the operations of companies using cars and machinery.

The president of the Cyprus Consumers Association, Marios Drousiotis, estimates that the effects of the recent price increases may begin to be visible in the prices of goods and services around mid-October.

This doesn't mean that every product will increase in price by the same percentage. Much depends on the share of transportation and energy in a given company's costs. However, the pressure may be particularly noticeable in the case of food, deliveries, and services requiring frequent travel.

Electricity bills can exceed 300 euros

Electricity costs also remain high. According to a representative of the Cyprus Energy Authority (EAC), the September price is around 30 cents per kilowatt-hour, including VAT.

A family of four without a photovoltaic system that used air conditioning extensively during the summer heatwave could face a bill exceeding €300 for August and September. However, this is only an estimate, as the final amount depends on actual consumption.

It's currently unclear whether energy prices will rise in October. The EAC holds some CO₂ emission allowances purchased earlier at lower prices. This could help limit the scale of any potential price increases, but it doesn't guarantee that current rates will be maintained.

Winter can be expensive

The biggest unknown remains how the situation in the Middle East will develop. If tensions begin to ease, prices for raw materials and finished fuels could stabilize. However, a renewed supply squeeze could lead to further price increases.

It's already clear that the upcoming heating season will be significantly more expensive for households using heating oil. The record fuel price is reaching peak demand even before the peak demand period.

Drivers should also not assume that the diesel price increase of €2 is a temporary, one-day phenomenon. Further price changes may appear this week.

Sources: Phileleftheros, Alpha Cyprus, Cyprus Consumers Association, EAC, Reuters, Bloomberg