Fuel prices could near €2 as tax cut ends

Fuel prices in Cyprus are facing renewed upward pressure as international oil prices rise above $90 a barrel, while the expiry of reduced fuel taxation on 17 September could push diesel prices close to €2 per litre, according to Christodoulos Christodoulou, Vice President of the Pancyprian Association of Petrol Station Owners.

Speaking to CNA, Christodoulou said small but continuous increases have been recorded over the past two weeks, particularly in diesel, following fluctuations in international oil prices.

He said the price of oil has risen to around $90-$91 a barrel, from approximately $80 within a week.

However, he noted that it is still too early to accurately estimate how much of the increase will be passed on to consumers, as companies first need to receive fuel shipments purchased at higher international prices.

International oil prices are also fluctuating significantly, making it difficult to predict the final impact on fuel prices.

17 September deadline

The expiry of the reduced special consumption tax on 17 September is particularly important for consumers.

According to Christodoulou, if the measure is not extended, fuel prices will automatically increase by 8.33 cents per litre, including VAT, for both 95- and 98-octane petrol and diesel.

He estimated that diesel could approach €2 per litre if the tax relief is not extended.

Under the current measure, the special consumption tax has been reduced from €0.429 to €0.359 per litre for petrol and from €0.40 to €0.33 per litre for diesel. The total relief amounts to 8.33 cents per litre, including VAT.

The extension until 17 September was agreed by the Finance Ministry following a request from most political parties, allowing the measure to be reassessed when Parliament resumes its work in the autumn.

The ministry previously estimated that the extension would provide a total benefit of €15.5 million to consumers.

Asked on 25 August whether a further extension was being considered, Finance Minister Makis Keravnos said the measures were being continuously assessed based on developments and that decisions would be taken “at the given time”.

He also noted that European Commission guidelines require such measures to be targeted and temporary.

Fuel supplies remain stable

Despite the geopolitical crisis in the region, Christodoulou said there are currently no problems with fuel supplies.

He said companies are meeting petrol station orders and have assured operators that there are no supply issues.

Cyprus imports fuel from Greece and Israel, and the regional geopolitical situation has so far not affected supplies, he said.

Despite higher prices, fuel consumption during the holiday period remained at roughly the same level as last year, with increased travel offsetting the impact of higher costs.

However, Christodoulou said more people are travelling to the occupied areas to purchase fuel, attributing this to higher prices in the government-controlled areas.

He also noted that the growing use of hybrid and electric vehicles is gradually affecting fuel consumption. The impact on sales is not yet significant, he said, but is expected to become more noticeable as sales of electric and hybrid vehicles increase.

Heating oil raises concerns

Christodoulou also expressed concern over heating oil, whose price has approached €1.50 per litre.

Filling a 1,000-litre tank would therefore cost around €1,500, he said, creating a significant financial burden for households ahead of the winter.

He recalled that heating oil was priced at around €1.10 per litre at the end of last winter.

Also read: Fuel prices: How Cyprus compares with the EU
For more videos and updates, check out our YouTube channel