Spanish fuel prices jump 5.6% as VAT reduction expires, despite new 15-cent rebate

Tax shift ends five-week price slide

Spanish fuel prices snapped a month-long downward trend in the first week of July, with gasoline climbing 5.56% and diesel 2.13% from the previous week, according to the EU Petroleum Bulletin published on 9 July. The average litre of gasoline reached €1.517, returning to levels last seen a month ago, while diesel hit €1.535, erasing two weeks of declines. The increases came immediately after the government’s 29 June decree let the VAT rate on fuels revert from 10% back to 21%.

Government measures and their limits

The VAT reduction had been part of an anti-crisis package introduced in March after the Iran conflict erupted on 28 February. That package also included a hydrocarbon tax cut that, together with the lower VAT, kept retail fuel prices from tracking the full 63% surge in Brent crude at the worst of the crisis. Petrol peaked at a 24% increase and diesel at 38% on 21 March, just before the measures took effect. The Economy Ministry estimated the package trimmed inflation by about one percentage point in April, May and June.

To cushion the VAT restoration, the 29 June decree introduced a special hydrocarbon tax rebate of 15 cents per litre for July, falling to 10 cents in August and 5 cents in September. Industry groups AICE and CEEES had warned that this would not fully offset the VAT increase, and the latest price data bears that out.

Oil market backdrop

Brent crude fell in late June and early July to near pre-war levels after a US-Iran peace pre-agreement raised hopes of an end to the Strait of Hormuz blockade. Yet the drop in wholesale oil prices did not translate into equivalent relief at Spanish pumps. El Confidencial notes that the pre-tax price of both fuels declined more slowly than Brent, and the expiry of fiscal support has now pushed pump prices higher even as crude remains relatively subdued.

Impact on drivers

Filling a typical 55-litre diesel tank now costs €84.42, up €6.43 from a year ago. A petrol fill-up costs €83.43, €1.37 more than in July 2025. Despite the recent increases, both fuels remain well below the summer 2022 peaks of €2.141 for petrol and €2.10 for diesel.