SOCAR Matches Eni's Fuel Price Cap, Supporting Italy's Cost Control Efforts
Italy's Response to Rising Fuel Prices
By Giuseppe Fonte and Francesca Landini
SOCAR and Eni's Price Cap Initiatives
ROME, Sept 28 (Reuters) - Azerbaijan's state oil company (SOCAR) will match a price cap on fuels sold in Italy adopted by Eni, sources said on Monday, helping Prime Minister Giorgia Meloni's efforts to tame rising energy costs amid global supply disruptions.
Details of the Price Cap
Asking not to be named, people familiar with the matter told Reuters SOCAR was capping diesel prices at the pump at €2.19 ($2.49) per litre and petrol at €1.99 per litre. It was not immediately clear when the cap would be introduced.
Potential Market Impact and Other Players
Officials from Meloni's office said they were in contact with Kuwait's Q8, a third major player in the Italian fuels market. They said Q8 was sending "positive signals" about its willingness to also put a lid on pump prices.
Effectiveness and Early Results
Eni's cap became fully effective on Monday but has so far had little impact in lowering average fuel prices for motorists, according to industry minister data on Monday.
Current Fuel Prices
Self-service prices for petrol stood at €2.152 per litre on Monday from €2.159 on Sunday, while diesel prices also eased marginally to €2.369 from €2.377. Prices on motorway networks were €2.214 for petrol and €2.420 for diesel.
Consumer Response
"Despite Eni's extensive distribution network, the impact on national averages was quite small," Italy's National Consumers Union said in a statement.
SOCAR's Implementation and Market Share
SOCAR, which sells fuel in Italy through its local unit Italiana Petroli (IP), said on Sunday it would "progressively" implement a cap, without disclosing the new prices.
The sources said the company had begun to align with Eni at some of its service stations but the impact was not incorporated in the industry ministry's data issued early on Monday.
SOCAR and Eni control more than 40% of Italy's pump station network.
Government Measures and Economic Impact
Meloni's Efforts to Control Costs
Rising energy and consumer prices due to the Middle East conflict has been a major headache for Meloni, who has tried for months to shield households and businesses while keeping Italy's strained finances in check.
Excise Duty Cuts and Fiscal Impact
Prior to Eni's decision, Meloni had repeatedly renewed temporary cuts in fuel excise duties in order to curb costs for motorists, at a total cost, including tax breaks for truck drivers, of around €2.8 billion in lost revenue.
The government's latest cut, which is set to expire on October 5, only covers diesel and was reduced on Saturday to around 6 cents per litre from 12 cents.
Market Reactions and Future Outlook
Stock Market and Policy Implications
Eni shares were up by around 2.2% as of 1320 GMT as traders bet that profits arising from the energy crisis will more than offset costs associated with the price cap.
Broker Intermonte said the cap could persuade Rome to pull back from mooted plans to introduce a windfall tax on energy companies.
Possible Regulatory Changes
Amid the ongoing efforts to curb price rises, a government official told Reuters on Monday that Rome was considering easing regulations in requirements in order to help refiners boost their domestic production.
($1 = 0.8800 euros)
(Editing by Alexander Smith, Gavin Jones and Alvise Armellini)