Latvia may release up to 40,000 tonnes of oil reserves onto the market, Economy Minister Viktors Valainis said on Thursday.
The minister explained that following the International Energy Agency (IEA) announcement about releasing oil reserves to the global market, Latvia has started a procedure to assess fuel availability in the domestic market. Market participants have been sent a survey regarding the fuel reserves physically stored in Latvia, the volumes held by traders and the current situation in the fuel market, including pricing policies. After the information is collected, authorities will decide on further action regarding the potential use of Latvia’s reserves.
Valainis noted that physical fuel availability in Latvia is currently stable, and there are no significant supply risks at the moment. However, developments in global markets remain difficult to predict, making it necessary to maintain a cautious approach and consider different scenarios.
According to the minister, if a decision is made to release reserves, the goal would be to achieve the greatest possible impact on the market and fuel prices,
while preserving the main purpose of reserves – ensuring fuel availability in case of a real shortage in Latvia.
Valainis emphasized that IEA member states make joint decisions on releasing reserves in response to potential fuel shortages in global markets. Each country then determines how much of its reserves to release, based on its available stock. Such actions send a signal that fuel shortages caused by military conflicts – estimated at around 20% of the market – can be compensated by strategic reserves.
He added that the Baltic states should also coordinate their actions with Poland, one of the largest fuel wholesalers supplying the Latvian market. According to Valainis, coordinated regional action could have a stronger stabilizing effect on the market.
“If these reserves are released onto the market, the effect will be short-term. It cannot have a long-term impact. From Latvia’s side we are talking about 40,000 tonnes – enough for roughly 10 to 14 days,” the minister said, adding that Latvia’s participation would be part of a broader international effort to stabilize global fuel markets.
At the same time,
Valainis stressed that Latvia should approach the use of reserves carefully.
Oil market conditions have been highly volatile in recent weeks, and the country should aim to preserve as much of its physical reserves as possible.
The minister also expressed a personal view that reserves purchased and stored in Latvia and owned by the state should not be released, given the unpredictable development of the situation. Instead, Latvia could consider using so-called “ticket” agreements, which provide access to reserves stored abroad.
Regarding the potential impact on consumers, Valainis said it is currently difficult to predict. If reserves were sold at market price, the impact on fuel prices might be limited. Greater influence could come from additional government support mechanisms.
In the minister’s view, one of the most effective options would be reducing the fuel excise tax.
The government will decide whether such a step is necessary depending on how fuel prices develop and how long the geopolitical tensions last.
Valainis also noted that authorities are considering introducing a temporary windfall tax on fuel companies to prevent unjustified profits during periods of price volatility. If companies gain unusually high profits, the excess earnings could be redirected to the public through fiscal measures.
Meanwhile, Circle K Latvia fuel category manager Gatis Titovs told journalists that fuel prices should be assessed not only based on crude oil prices but also on refined fuel trading prices on international exchanges.
He explained that over the past month the price of Brent crude oil increased from around 68 to 98 dollars per barrel, while diesel fuel exchange prices rose from about 700 dollars per tonne in early February to around 1,200 dollars. Converted into euros per litre, this increase could mean roughly 46 cents higher prices for consumers.
According to Titovs,
retail fuel prices have so far increased by about 36 cents per litre,
which he says corresponds with market developments. He added that fuel retailers are partially absorbing cost increases from their own margins and that there is currently no basis to claim excess profits.
He also stressed that there are no supply problems in Latvia at the moment. Discussions with suppliers and industry associations confirm that there are no issues with oil deliveries, refining capacity or logistics. Therefore, a fuel shortage is not expected in the near future, and the main concern remains price volatility.
The head of the Competition Council of Latvia, Ieva Šmite, commented that the authority only draws conclusions after detailed investigations and a full analysis of the available information. Thursday’s meeting with industry representatives was primarily informational, she said.
Previously it was reported that since the escalation of the conflict in the Middle East on the 28th of February, the average price of diesel fuel at Latvia’s largest filling station networks has increased by about 25%, while the price of 95-octane petrol has risen by 7–9%.
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