The oil company said in a statement on Monday that coronavirus lockdowns in both Portugal and Spain caused "severe regional demand drops" but in June it had seen "supportive signs".

Despite some positive recovery indicators, including regarding demand, Galp said the outlook for 2020 remained "challenging" as it expects a "weak and volatile refining and trading environment"

It fell to a second-quarter net loss from an adjusted net profit of 199 million euros a year earlier.

Oil product sales fell 44% on low demand, especially in the aviation sector and retail, mostly in April and May, as a result of lockdown measures, Galp said.

The situation forced Galp to suspend output at the smaller of its two refineries, in Matosinhos near Porto, and to shut down its bigger refinery in the south of the country for a month from May 4 after the drastic drop in demand left it out of storage space.

The Sines stoppage brought all its domestic operations - making up 20% of the refining capacity on the Iberian peninsula - to a halt. Galp has resumed production at both refineries.

Galp said its second quarter was also hit by 92 million euros in impairment charges related to smaller scale exploration assets.

It said its upstream RCA EBITDA - earnings before interest, taxes, depreciation and amortisation - fell 50% to 204 million euros reflecting a sharp decrease of oil prices.

Refining and midstream RCA EBITDA fell 80% to 19 million euros, it said.

(Reporting by Catarina Demony and Sergio Goncalves, editing by Kim Coghill and Jason Neely)