No Oil for Greece

SUBHEAD: The Greeks are finding it increasingly harder to get crude oil for energy from anywhere.  
 By SaraKent & Jenny Gross 0n 31 May 2012 for WSJ -  

Image above: Greek outnumbered by Persians faces death. Still from movie "300". From (
Greek refiners are finding fewer willing sellers of crude oil as suppliers wary of the country’s economic situation avoid doing business there, people familiar with the situation said. The issue extends beyond the supply of crude oil to oil products that are used for fuel, heat and power generation and are essential for industrial activity.

A trader described people in the market as “completely reluctant” to deal with Greece, amid concerns over customers’ ability to pay for oil, as rising fears that the troubled country could be forced out of the euro zone have dented sellers’ confidence, and with banks increasingly reluctant to supply Greek companies with credit lines.

A Swiss-based trader of fuel oil, which is used for power generation, said that his attempts to sell the product to Greece had been stymied two or three times in recent months after banks refused to back up the sales, forcing him to eventually abandon selling to the country altogether.

A third trader said not many companies can get finance to back up trades with Greece, and that in their absence major trading houses like Vitol and Glencore have stepped in to deliver. Unlike small oil companies that can’t afford to miss out on payments, Glencore and Vitol can cope with this risk, the trader said.

“If I miss out on a cargo, we report big losses which we can never make up,” he said. “They may have some possibilities of covering that risk, like exchanging oil.”

For much of last year and the beginning of this year Greece bought substantial amounts of oil from Iran at very advantageous credit terms, but Iranian state media reported in April that the country was cutting off supply to Greece as a result of unpaid bills, and in any event a European Union-wide embargo on the import of Iranian oil is set to come into force July 1.

Since then Greece had to rely on oil from other sources, including Libya, Russia and Iraq, even as the number of market participants willing to trade with Greek customers has dwindled. The Swiss-based trader said there is room for things to get even worse should Greece exit the euro zone.

It would be a “small disaster” for the oil industry there, he said. While Greek demand for oil products could be expected to fall by as much as 30%, people will still need to heat their homes and drive cars, he said.


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