Fuel prices in Bulgaria have so far remained unchanged, while the international crude oil market continues to be influenced by developments linked to tensions between the United States and Iran. This was explained on the programme Denyat Zapochva (The Day Begins) by Svetoslav Benchev, Chairman of the Bulgarian Petroleum and Gas Association on February 2.
He warned of a significant grey market, affecting around 17% of diesel fuel sales in the country.
Speaking on air, Benchev said that fuel prices in Bulgaria are currently showing no upward or downward movement. By contrast, international markets are being driven by what he described as two key words: “armada” and “deal”.
“When the word ‘armada’ is mentioned, crude oil prices go up; when the word ‘deal’ is mentioned, they go down,” he said. “This morning we are seeing a sharp fall of around 4%, after prices had risen to about 70 dollars per barrel. Today they are at around 66 dollars. Overall, things are normalising, as there are no indications of a serious increase in crude oil prices at least for the time being. All analysts, myself included, expect oil overproduction this year, so there is no reason to fear a price rise.”
According to the expert, fluctuations in international markets, unless they are long-term, do not affect the price stability of fuel in the country.
According to Mr Benchev, short-term fluctuations on international markets do not affect fuel price stability in Bulgaria unless they are sustained over a longer period.
“The trend is very volatile — two or three days up, two or three days down — and that does not have a significant impact on our market,” he said. “For a serious change in domestic fuel prices, we would need to see an increase or decrease lasting 10 to 15 days. If nothing extraordinary happens, if the armada does not strike Iran and there are no other unforeseen factors, I do not expect a serious rise in crude oil prices and, consequently, in fuel prices.”
Global oil consumption has declined in recent years, while production has increased, he added.
“Despite the quotas imposed by OPEC — Saudi Arabia and other countries, plus Russia — additional volumes are still entering the market, sometimes unnoticed. This affects supply and demand. We should also not forget shale oil production in the United States, which is also adding extra volumes to the market,” he said.
An analysis by the Centre for the Study of Democracy shows that Bulgaria has a substantial grey market in fuels, with the damage caused estimated at up to 350 million euros.
“This figure means that around 17% of diesel fuel in the country is sold without taxes and excise duties being paid. That amounts to about 690 million litres per year,” Mr Benchev said. “The study was carried out with the active involvement of the National Revenue Agency and the Customs Agency, and it reflects the reality of the problem.”
He added that controls are not comprehensive. Electronic systems can be compromised, and some operators manipulate reporting data. The problem is systemic and solutions must be sought, including removing manipulated systems from the market, he stressed.
“The average price of petrol fuels in Bulgaria is 1.23 euros. A price of 98 cents indicates that something has not been paid along the supply chain — most likely excise duty and VAT. The other possibility is non-market practices, because it is not possible to sell below cost,” he said.
Benchev warned that consumers filling up at lower prices should be aware that fuel quality is not guaranteed.
On fuel exports, he added that the National Assembly has still not lifted the export ban, which is creating serious problems for businesses.
“We cannot export either within the EU or outside it. The domestic market is fully supplied and the refinery is starting to operate at optimal capacity,” he said.
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