The Market
Petroleum, the fossil fuel that dominates global energy consumption, remains the world's primary energy source, crucial for powering internal combustion engines that facilitate the transportation of people and goods by land, air, and sea. The catalytic role that petroleum plays in our daily lives worldwide is evident in two key examples. First, during the pandemic, when lockdowns led to a massive drop in consumption, retail prices remained stable despite the reduced demand. Second, the crisis in Ukraine and the Middle East drove up demand, causing a corresponding increase in retail prices. These examples highlight that, regardless of fluctuations in extraction, refining, and wholesale activities, the necessity of petroleum keeps prices high for consumers, underscoring its indispensable role in modern life.
On April 20, 2020, the price of crude oil plummeted to a negative value for the first time in the history of the oil markets. Producers were forced to pay to dispose of their excess stock due to a lack of storage capacity. Within two days, the price of oil dropped by 305%, reaching approximately -$38 per barrel. This unprecedented decline in demand for oil was attributed to the COVID-19 pandemic, which was considered a "black swan" event for the energy market. The global restrictions imposed to curb the pandemic had severe impacts on oil demand, including the suspension of flights, the cancellation of cruises, reduced public transportation, decreased consumer traffic, and widespread business closures, all of which led to a sharp decline in oil consumption.
On February 24, 2022, following an order from the President of the Russian Federation, Vladimir Putin, Russian troops invaded Ukraine, exacerbating the global energy crisis. The invasion, coupled with subsequent Western sanctions, created further pressure on oil and natural gas supplies, which were already strained by the rapid economic recovery following the pandemic.
The domestic petroleum products market in Greece operates on three levels: refining, wholesale, and retail. Gas oil and heating oil are the most in-demand products, followed by motor gasoline, with the transportation sector being the largest consumer. Chart 1 illustrates the oil value chain from the perspective of the Greek market. It shows that a portion of the final petroleum products consumed in the Greek market is directly imported from international petroleum product markets without passing through Greek refineries. Simultaneously, some petroleum products produced in Greece bypass oil marketing companies.
Process Overview:
- Extraction: Crude oil imports
- Refining: In both Greek and foreign refineries
- Marketing: Conducted by petroleum products trading companies
- Consumption: Involves joint ventures of service stations, independent service stations, exports, and international sales for aviation and shipping.
The energy landscape has experienced significant shifts, resulting in new challenges and opportunities within the industry. These changes underscore the urgent need for innovative approaches and strategic solutions to effectively navigate the evolving market dynamics. In response to these developments, the creation of a new company has become essential. This company will be poised to address emerging needs, seize new opportunities, and enhance the resilience of the energy sector. WELCOME AT OXYGEN ENERGY S.A.