Oil: the downward price cycle slightly increases profit margins

Wholesale and retail fuel trading is one of the least profitable activities in the country in terms of profit margins.

Although wholesale and retail hydrocarbon trading companies dominate the list of the largest businesses by revenue, they are very few in the list of top profit-makers, as they continue to declare very low profit margins that do not exceed 5% for retailers and 2.5% for wholesalers.

In 2024, fuel prices continued their downward trend for the second consecutive year, falling on average to 175 lek per liter from 180 the previous year.

Consumption continued to grow, influenced by lower prices, increased tourism (many of whom use rental cars), and overall higher mobility. In 2024, fuel imports reached 657 thousand tons, the highest level ever recorded, up 7% year-on-year.

The increase in the number of vehicles in circulation is another factor boosting fuel consumption. Data from the General Directorate of Road Transport shows that the number of active vehicles in circulation reached nearly 960,000 at the end of 2024, up from 676,000 in 2020.

In 2024 alone, a record number of nearly 100,000 vehicles were registered, thanks in part to the discovery of a new purchasing market — South Korea — which accounted for 19% of first-time vehicle registrations.

Despite rising consumption and a high turnover (three wholesale hydrocarbon trading companies ranked among the top 10 of “Monitor 200” by revenue in 2024, and 21 companies were in the top 200 list), their profits remain minimal, and most operators do not even make it into the list of 200 largest profit-makers.

Only two companies ranked among the largest by profits in 2024.

Some companies saw a slight improvement in profit margins during 2024.

Operators explain that when prices are low, companies have more room to maneuver with pricing, as price adjustments reflecting global market drops occur more slowly.

In 2024, prices trended downward, favoring importing and trading companies.

“Kastrati Energy Trade” (wholesale) was the largest company in the country in 2024 by annual turnover, with revenues of 77.6 billion lek, twice as high as the second-largest private company.

However, in profit rankings it placed 18th, as profits remain minimal compared to turnover, reaching 1.76 billion lek before taxes. Its profit margin improved slightly to 2.3%, from 2% the previous year.

“Gega Oil Group” (wholesale) is the second-largest fuel trader in the country by annual turnover. Its revenues remained nearly unchanged at around 36 billion lek.

Profits were minimal at 144 million lek, a slight increase from the previous year, insufficient to enter the ranking of top companies by profit. It reported a tiny margin of 0.4%, up from 0.37% in 2023.

“Europetrol Durrës Albania,” the third-largest fuel trader by annual turnover, with 35.5 billion lek in revenues, reported profits of 191 million lek in 2024, with a profit margin of 0.68% (up from 0.57% the previous year).

Another wholesale operator, “Bolv Oil,” with revenues of 15 billion lek, declared losses of 239 million lek in 2024.

“Eroil,” the fifth-largest wholesale trader, reported revenues of 11.7 billion lek and minimal profits of 12 million lek, maintaining an unchanged margin of 0.1%.

Retail traders have slightly higher profit margins compared to wholesalers, reaching up to about 5%.

“Kastrati Energy,” the largest retailer in the country, reported revenues of 18.3 billion lek and profits of 792 million lek, ranking in the “Monitor 200” list by profit. Its profit margin improved to 4.3% in 2024, from 2.5% the year before.

“Olsi sh.p.k.,” another major retail fuel trader (retail operator of “Bolv Oil”), with revenues of 6.7 billion lek, reported losses of 40.7 million lek.

“Gega Center GKG” had revenues of 7.2 billion lek and returned to profitability, although profits remained minimal at 32 million lek, with a margin of 0.45%.

Data shows that operators achieve higher profit margins in periods when fuel prices are declining, as price reductions in the domestic market occur more slowly than in international markets.

The opposite happens when global prices rise — in such cases, profits usually do not increase.

According to operators, low profits in this sector are influenced by several factors: small price movements in the global market, intense competition in the domestic market due to the high number of operators and fuel stations relative to consumption and vehicle circulation, and high investment costs for storage facilities.

Data from the Hydrocarbon Companies Association shows that coastal storage capacity is about three times higher than actual demand — around 300–400 million liters from Vlora to Shëngjin, versus only 60 million liters actually needed.

The association also notes two additional factors affecting trader profits: price differences with border areas, which encourage consumers to refuel outside Albania, and smuggling through fishing boats, which increases competition and forces importers to lower prices.

“KORÇA BOOM”