Latvia Weighs Releasing Oil Reserves Amid Global Market Volatility
Latvia is considering releasing up to 40,000 tons of oil reserves onto the market, following a decision by the International Energy Agency (IEA) to release reserves globally. The move aims to stabilize fuel prices and ensure supply security amidst ongoing geopolitical uncertainties, according to Economics Minister Viktors Valainis.
Assessing Market Conditions
Currently, the Ministry of Economics is gathering data from market participants regarding fuel reserves, trader volumes, and pricing policies. This information will inform a final decision on the use of Latvia’s strategic reserves. Minister Valainis emphasized that Latvia currently maintains stable physical fuel reserves and does not face immediate supply risks. However, he acknowledged the unpredictable nature of global markets and the need for a cautious approach.
Balancing Market Impact and Reserve Purpose
Valainis stressed the importance of maximizing the impact on market conditions and fuel prices even as preserving the primary function of the reserves – ensuring fuel availability during a genuine shortage in Latvia. The IEA member states are jointly deciding on reserve releases in response to potential fuel shortages, with each country determining its contribution based on its reserve levels. This coordinated effort aims to offset a 20% shortfall in the fuel market attributed to ongoing conflicts.
Regional Coordination
The Latvian Economics Minister highlighted the potential benefits of coordinating with Poland, a major fuel wholesaler for Latvia, and other Baltic states. Such collaboration could amplify the positive impact on the regional market. Valainis noted that releasing the reserves would likely provide only a short-term solution, estimating that 40,000 tons would cover approximately 10 to 14 days of demand.
Cautious Approach and Potential Tax Measures
Valainis cautioned against depleting Latvia’s reserves, citing the volatile oil market and the importance of maintaining a substantial stockpile. He personally believes that state-owned reserves should remain untouched due to the unpredictable future. The government is also exploring options such as utilizing option contracts and considering a temporary surplus profit tax on fuel traders to prevent unjustified price increases.
Industry Perspectives
Gatis Titovs, head of the fuel category at Circle K Latvia, indicated that fuel prices are more closely tied to stock exchange fuel quotations than crude oil prices. He stated that diesel fuel quotations have risen significantly in recent months, contributing to price increases at the pump. Titovs also noted that fuel traders are absorbing some of the increased costs through savings and profits, and that no fuel shortages are currently expected. However, he acknowledged that discussions with the Minister of Economy did not fully resolve concerns about price dynamics.
Competition Council Review
Ieva Šmite, Chairperson of the Competition Council of Latvia, stated that the institution is monitoring the situation and will conduct thorough research before drawing any conclusions. The council held an informative meeting on the matter but refrained from providing further comments at this time.
Recent Price Increases
Since the escalation of the conflict in the Middle East on February 28, 2026, the average price of diesel fuel in Latvia has increased by approximately 25%, while the price of 95-octane gasoline has risen by 7-9%.