The ongoing Greek economic crisis will lead to a sharp decline in the demand for fuel and petroleum products, the International Energy Agency (IEA) has noted.

An exit from the eurozone – whose probability was greatly diminished this morning with the announcement of a basis for a bailout agreement between Greece and lenders – would further subdue demand for petroleum products in the Greek market, while a return to the drachma, and its anticipated slide against hard currencies, would favor local refinery exports, the IEA noted in a report for the month of July.

The introduction of capital controls in Greece and the refusal of credit card transactions at many petrol stations are expected to subdue consumer access to petroleum products, the report noted.

The macroeconomic prospects for Greece and, possibly, Europe as a whole, are under threat as a result of the domestic turmoil and negotiations with the country’s creditor representatives, IEA noted.

The agency noted that first-quarter demand for fuel in Europe and Greece rose by 4.6 percent and 15 percent respectively. This significant increase is not sustainable, while, in the short term, is expected to contract in Greece, noted the agency. It primarily attributed the fuel demand increase in Greece to the extremely cold weather last winter.

Current forecasts for fuel demand in Greece expected the level to drop from 290,000 barrels per day in the first quarter to 275,000 barrels per day by the fourth quarter. An even sharper drop, prompted by the latest events, was not ruled out by the agency.