The release of strategic reserves is unlikely to lead to a noticeable decrease in fuel prices in Bulgaria. This was stated in the program “This Morning“ on bTV by Tsvetomir Nikolov, an analyst in the program “Energy and Climate“ at the Center for the Study of Democracy.
“I do not expect it to have an impact. The reserves are not able to satisfy either the long-term or short-term demand for diesel and kerosene. At the same time, they increase the risks for certain countries“, he explained.
According to him, the release of reserves may temporarily limit the increase in prices, but will not solve the main problem.
“It will not dramatically affect the price in any way. It can hold it at the current levels for a few weeks, but if fuel demand continues to be what it is now - stable or even slightly increasing, prices will certainly continue to rise. There is simply not enough refinery capacity for diesel in the world, as well as for kerosene“, Nikolov said.
According to him, the excessive use of strategic reserves also poses an additional risk in the event of possible future supply problems.
“If a problem arises in the US with diesel production, and Europe has previously released its reserves, it could lead to an even bigger problem with fuels. Then it will be necessary to simultaneously increase supplies for current consumption and replenish reserves,“ he pointed out.
Milen Keremedchiev, former Deputy Minister of Foreign Affairs, also commented on the pressure from US President Donald Trump on Europe.
“The threat is serious, but it is not far-sighted. With hysteria, such as we are currently seeing in the markets, you can never say that such a measure will have a long-term impact on fuel prices“, said Keremedchiev.
According to him, about 30% of diesel imports into the European Union come from the US, and Trump is trying to limit the rise in fuel prices on the domestic US market.
“Stopping diesel exports does not automatically mean a drop in prices in the US. Maybe in the short term there will be more supply, but there is no shortage of diesel there. If there is an export ban, refineries will start to reorient themselves towards the production of other types of fuels that they can sell, because ultimately they want to make a profit," he explained.
According to Keremedchiev, such a measure could have the opposite effect.
„If the US makes this decision, it will not reduce prices and will further increase panic in the market. Diesel stocks in the world are very low“, he pointed out.
Nikolov specified that at the moment there is no serious risk of a massive physical shortage of fuels in the US and Europe.
„For the US and Europe there is no real risk of a physical shortage on a massive scale. Certain countries are at greater risk depending on how dependent they are on imports and what refining capacity they have“, the analyst explained.
He stressed that the fuel market is global and the global diesel shortage also affects prices in Europe.
“The prices of both crude oil and fuels go hand in hand. The one who can provide additional capacity in a crisis period receives a higher price and a higher profit“, Nikolov said.
According to him, Bulgaria is an indicative example because the country has both crude oil supplies and sufficient refining capacity.
“Bulgaria has crude oil supplies and sufficient refining capacity to produce petroleum products almost at maximum. The problem is that Bulgarian production cannot solve the problems of the entire global market and that is why we suffer from the high prices we see at gas stations,“ he said.