Portugal fuel prices set to rise again as diesel nears €2 per litre; government cuts tax to soften blow
Portugal’s diesel and gasoline prices are set to climb for a fourth straight week on Monday, with diesel expected to breach the €2 per litre mark despite a government tax cut.
Price increases for fourth consecutive week
Portugal’s fuel prices are set to rise again on Monday 27 July, marking the fourth consecutive weekly increase. Forecasts from SIC and the Automóvel Club de Portugal (ACP) point to a 9 cent per litre jump for diesel and a 3 cent rise for gasoline. The estimates are based on Thursday’s market close and may shift with Friday’s trading, but the direction is clear. According to the Directorate-General for Energy and Geology (DGEG), the average price of diesel stood at €1.968 per litre on 24 July, while gasoline averaged €1.974. If the predictions hold, diesel will climb to €2.058 and gasoline to €2.00, breaching the symbolic €2 barrier for the first time in this cycle. The ACP cautioned that any oscillation in crude and fuel quotations by the end of Friday could alter the final figures.
Caso se confirmem as previsões para a próxima semana, o preço médio do diesel vai subir para 2,058 euros por litro, enquanto a gasolina vai aumentar para 2,00 euros por litro.
- Brent crude surpasses $100 per barrel after Houthi attacks on Saudi tankers
- Government announces ISP tax cut of 1.5 cents on diesel, less than 1 cent on gasoline
- Diesel price expected to rise to €2.058/litre, gasoline to €2.00/litre
Government tax cut cushions but does not halt rise
Late on 24 July, the government published an order reducing the petroleum products tax (ISP) to offset the VAT windfall from higher prices. For diesel, the ISP rate was cut by 1.5 cents per litre; with the VAT effect, the net increase is trimmed to about 7 cents. For gasoline, the reduction is less than 1 cent, limiting the rise to roughly 2 cents. Despite the intervention, diesel is still expected to surpass €2 per litre. The Economy and Territorial Cohesion Minister said the government “continues attentive” and is permanently evaluating whether further measures are justified beyond the existing ISP discount. The discount rule was designed to support prices when crude spikes, and the government has confirmed it will be maintained.
O Governo continua atento ao assunto. Há um desconto que nós estamos a fazer neste momento e que vai ser mantido.
- Diesel gross increase
- 9 cents/litre
- Diesel net increase
- 7 cents/litre
- Gasoline gross increase
- 3 cents/litre
- Gasoline net increase
- 2 cents/litre
Oil market pressure from Middle East tensions
The fuel price rally is driven by crude oil’s surge above $100 per barrel. Brent crude touched that level on 23 July after Houthi forces, allied with Iran, attacked Saudi Arabian tankers. Markets fear that shipping disruptions could spread from the Strait of Hormuz to the Red Sea, a key diversion route for traffic affected by Iran’s blockade. By 24 July, Brent had eased to $97 per barrel, but the weekly trend remains sharply higher. This is the fourth week that Portuguese pump prices have reflected the international crude rally, with diesel bearing the brunt because of its higher refining and distribution costs. The government’s ISP adjustment is triggered automatically when prices rise, clawing back extra VAT revenue to soften the impact at the pump.
What comes next
The government has maintained the ISP discount mechanism and says it is monitoring the situation. Any additional intervention would depend on how oil markets evolve. Final pump prices will vary by region, brand, and service station; consumers can check the cheapest options via the DGEG’s official comparator. With no public support schemes for transport and other exposed sectors currently in place, the rising fuel costs are set to feed through to broader inflation pressures.
