Oil Products Market and Forecasts
As noted by Vano Mtvralashvili, head of the Union of Oil Importers, the oil products consumption in the country has almost halved because of the state of emergency. The current reserves are more than enough and fuel prices will decrease further, he said.
The global market has not seen similar plunge in oil prices over the past 20 years. The current challenge emerged primarily after 3 billion residents of our planet got stuck in quarantine. As a result, the demand for fuel has shrunk, Vano Mtvralashvili noted.
The global tendency has affected the Georgian market too. Over the past 2 months, the fuel prices declined by 35 Tetri on average, and the slowdown trend will be continued, Mtvralashvili noted.
“Over the past two months, the average price in retail network has declined by 35 Tetri, in some cases, even more. Different discount systems run for loyal corporate consumers and on the whole, the prices have declined much more. The price reduction tendency will be continued. This is not the bottom margin, where prices will stop”, Vano Mtvralashvili noted.
Today, we have diverse prices in Georgia, including extremely lower prices are recorded at non-branded fueling stations, where prices have fallen below 1.70GEL per liter, he said.
As for branded fuelling stations, the prices are comparatively higher, but this has a logical reason. First, separate non-branded companies operate without stocks, reserves.
"Consequently, it is easier for them to catch up with the global market prices, because they apply to the wholesale market after they have sold small volumes, and the global market records adequate prices in the wholesale sector. Consequently, their prices are low, however, I reaffirm that prices will decline further”, Mtvralashvili noted.
As for oil products supply amid the state of emergency, the country has enough reserves, because the consumption has halved and we do not expect any obstacles in imports, Mtvralashvili noted.
Fuel consumption has dropped in the country. On average, the consumption declined by 40%, but sometimes this ratio may be higher, Mtvralashvili said.
"I personally believe that the consumption will decline further in 20 days, because the state of emergency will be extended, including road traffic that previously used to get intensified in the Easter Days, will also slow down. Naturally, this will essentially decrease the fuel consumption. If we compared the 2020 January-March imports to the 2019 January-March indicators, the imports have increased by about 5%. The country has increased imports by about 12,000 tons. Amid the halved sales and increased imports, naturally, we have satisfactory condition in terms of reserves management. The supply chain was not disrupted from our supplier countries so far. These countries are: Azerbaijan, Bulgaria, Romania, Russia, Turkmenistan. The only problem arose in Iran, however this obstacle is related to infrastructural issues and this is another aspect.
Anyway, restrictions on this specific product will not create considerable problems. Reserves and stocks are more than enough. We have realistic expectations that the situation will be stable. Furthermore, we expect prices to decline further and this is very important for the country and the consumer”, Mtvralashvili noted.