Portugal's fuel price drop falls short as tax hike offsets savings

Fuel prices in Portugal have dropped less than expected this week. The government’s decision to raise taxes on petroleum products has limited the decrease at the pump. Meanwhile, global oil markets remain unstable due to ongoing talks between the US and Iran. Earlier forecasts from ANAREC predicted a 9-cent drop in diesel prices and a 2-cent reduction for gasoline. Instead, diesel fell by 7.5 cents per litre, while gasoline decreased by only 1.5 cents. The smaller-than-expected cut follows the government’s move to increase the ISP tax, which applies when fuel prices decline sharply.

Global oil prices have stayed near $100 per barrel, with Brent crude showing little movement. The slight dip in prices came after hopes of a US-Iran deal, though no agreement has yet been reached. Despite lower costs, the International Energy Agency (IEA) has urged measures like reducing commercial flights and expanding remote work to ease demand.

Portugal’s economy relies heavily on tourism, which makes up over 15% of its GDP. However, the IEA’s recommendations could impact travel and fuel consumption. At the same time, global oil reserves continue to shrink, even as prices remain below last week’s levels. Drivers will see only modest savings at the pump due to the tax adjustment. The government’s policy aims to balance revenue as oil markets fluctuate. With tourism playing a major role in the economy, any further changes in fuel costs or travel restrictions could have wider effects.