Apostolos Tomaras
Daily attacks targeting the world’s fuel supply lifeline in the Arabian Gulf have triggered an energy shock whose effects are expected to outlast the fighting itself in Iran.
With oil prices on international markets rising and falling like an elevator, the consequences for the global economy are already becoming visible and extend far beyond fuel for vehicles or electricity costs. International analysts warn that the real nightmare scenario is not the short-term disruption to supply chains caused by the conflict but potential damage to energy infrastructure that could prolong the crisis even if the war were to end today.
The situation has already set off alarm bells within the European Union, which is exploring measures aimed at limiting immediate impacts on retail fuel prices and electricity production costs.
Cyprus feeling the pressure
In Cyprus, fuel market professionals describe a difficult, though not yet critical, situation. Compared with other countries, Cyprus is currently in a somewhat better position, but uncertainty remains high.
“We can barely keep up with changing fuel prices since the war began,” said Kyriakos Louka, a petrol station owner, speaking to Kathimerini.
The volatility has unsettled the government, which faces the dual risk of pressure on the broader economy and unpredictable developments in the fuel and energy markets, particularly given Cyprus’ reliance on fuel oil for electricity generation.
Under current conditions, authorities have not ruled out intervention. If fuel prices surpass the 2023 threshold of €1.55 per liter and continue moving toward €2, the government may consider reducing the excise tax on fuel.
A market in constant motion
For those working in the sector, the situation since Feb. 25, 2026, the start of the war in Iran, has been anything but theoretical.
Retail fuel prices are now changing two or even three times a week, always upward, with no clear ceiling in sight or indication of how long the trend may last.
Louka described the speed of increases with a recent example:
“Last Wednesday I ordered 36,000 liters of fuel. The shipment arrived 10 hours later. When I placed the order, it cost €53,339. By the time it was delivered, the price had risen to €55,000 within just 10 hours.”
Industry estimates suggest that each fuel shipment has become roughly €10,000 more expensive since the conflict began. Before Feb. 25, oil traded at about $63 per barrel; last Friday it exceeded $110.
Prices climbing at the pump
The surge in oil prices is already reflected at petrol stations. Average retail prices across all fuel types have risen by about 20 cents per liter in recent weeks, with analysts warning that the increases could surpass the fuel crisis levels seen in 2023 if the upward trend continues.
For industry professionals, the most worrying, yet increasingly realistic, scenario is fuel prices reaching €2 per liter, an unprecedented level for Cyprus.
The pace of increases underscores the concern. Standard unleaded gasoline rose from €1.319 per liter on Feb. 25 to €1.489 within just 26 days. Much of the recent surge coincides with Iranian strikes targeting oil-processing infrastructure in the Arabian Gulf and ongoing disruptions near the Strait of Hormuz.
Government weighing its options
Facing mounting pressure, the government is preparing contingency measures should prices continue to rise.
For now, officials say no immediate intervention is planned if market conditions stabilize, a scenario viewed as unlikely under current geopolitical realities. The issue is expected to be discussed by the Cabinet next week as part of a broader review of the energy crisis.
Unlike some European countries that remain cautious, Nicosia appears ready to act by reducing the excise duty, currently set at €0.42 per liter, to help contain retail prices. Authorities are also examining the possibility of adjustments to VAT on fuel, which is calculated on top of existing taxes.
One option firmly ruled out, however, is imposing price caps. Energy Minister Michalis Damianou said increases reflect international market conditions rather than profiteering.
“There is no possibility of imposing a price cap because the price increases are justified by global price rises,” he told Kathimerini. “There is no price gouging.”
He added that both the Consumer Protection Service and the Finance Ministry are monitoring developments closely and will act if necessary, though “for now, no measures are required.”
EU watching closely
Any coordinated action across Europe is expected to come from the European Commission, likely drawing on policy tools created during the energy crisis following Russia’s invasion of Ukraine in 2022.
Brussels has indicated that broad, horizontal measures are unlikely. Intervention signals may come if oil prices remain above $100 per barrel for an extended period, defined as roughly two weeks, a threshold that current market conditions are already approaching.
Real-world impact
The rapid price increases are already affecting both consumers and businesses. Fuel consumption has reportedly dropped by around 10%, reflecting growing caution among households and companies alike.
According to Louka, the decline is visible not only in private vehicles but also across commercial fleets.
Meanwhile, the €10,000 increase in shipment costs is creating serious liquidity problems, particularly for smaller fuel stations. Operators say cash flow, more than profitability, has become the biggest challenge, directly affecting their ability to order new fuel supplies and threatening long-term viability.
As the conflict continues, the energy shock is increasingly shifting from a geopolitical headline into a daily economic reality felt at the pump.
