In 2018, the Estonian economic environment was also characterized by continued growth. According to Statistics Estonia, the GDP in Estonia increased by 3.9%, which, compared with 4.9% in 2017, was more moderate, but still it increased both the preceding years and the global economic growth on the average. The Group is still concerned by the brisk growth of the average gross salary, which went up by 7.3% in 2018 (as compared with 6.5% in 2017), exceeding the average economic growth for the seventh year in a row. With due consideration of the peculiarities of the Estonian labour market, we cannot expect the slowing down of the growth in salaries in the nearest future, which is why, in order to provide competitive ability, the added value that accompanies workplaces should go up continuously.
Since a large share of the turnover of VKG is made up of the sale of oils, the financial indicators of the Group are mainly affected by what is happening at the global oil market. Against the background of the favourable of macro-environment, in 2018, the prices for different kinds of fuels continued to grow. On the one hand, the reason for that was an increasing demand for fuels, i.e. according to the estimates of the International Energy Agency (IEA), the global demand for fuels increased by 1.2%, reaching 99.2 millions of barrels per day. On the other hand, the growth in prices was promoted by an agreement made between the OPEC and Russia concerning cutting down on production volumes as well as an abrupt decline in production in Venezuela. Even though the growth rate of production of shale oil in the USA has partially compensated for a decrease in production volumes in the OPEC, the decision made by the American president in May concerning the renewal of sanctions against Iran increased the price pressure even more, and by October, the prices for Brent crude oil reached 86 USD/bbl as compared with 66 USD/bbl at the beginning of the year. An increase in production volumes in the OPEC, as well as a relief of sanctions against Iran and the signs of the economic slowdown, brought Brent prices down to 50 USD/bbl fast enough by the end of the year.
VKG sells a major part of manufactured oils with 1% of sulphur content on the basis of the price for fuel oil, and since the expenses incurred by the company are in euros, the financial indicators of the Group are bet of all characterized by the fuel oil price curve below.
1-% price of crude oil, 2017 -2018