Why Prices Are So High
Crude oil prices have surged since the conflict in the Middle East began, rising from roughly $70 a barrel before hostilities in late February to about $100 per barrel today.
Transport fuels refined from crude—such as diesel, petrol, and kerosene used in aviation—are experiencing even sharper price pressures.
Gulf nations, already major crude producers, have become key exporters of refined products. After Russia’s invasion of Ukraine in 2022, Europe increasingly relied on these supplies.
However, maritime freight costs from the Middle East have spiked due to security risks in the Red Sea and the Strait of Hormuz, rendering refined‑product exports financially unviable. Tankers for refined fuels carry far fewer barrels than crude tankers, and the extra transport cost now reaches roughly $50 per barrel, according to TotalEnergies CEO Patrick Pouyanne.
Simultaneous Ukrainian drone strikes on Russian refineries are further tightening global supplies, especially diesel.
The combination is driving prices higher, boosting refiners’ margins while governments scramble to prevent shortages.
Why European Pump Prices Differ
Consumers across Europe face very different fuel prices because of divergent national tax and subsidy policies. Europe applies a minimum tax of 33 euro cents per litre for diesel and 35.9 cents for unleaded petrol, before adding value‑added tax (VAT) that starts at 15% and reaches 20% in France.
Each EU country can layer its own taxes on top of these minima, creating significant variation at the pump. On 14 September, EU data showed diesel at about €2.50 per litre in Denmark and Finland, €2.29 in France, and €1.83 in Spain.
Economist Julien Mathonniere of Energy Intelligence notes that taxes often account for more than two‑thirds of the retail price. This explains why diesel in Europe can be higher than in Asia, despite Asia’s closer exposure to regional conflicts.
Transport and production costs have a smaller impact, but if pre‑tax prices diverged too much, sellers would redirect fuel to higher‑priced markets.
How Europe Is Responding
Portugal and Romania have directly cut fuel taxes to blunt price hikes. Bulgaria has introduced a one‑off €50 payment for roughly 550,000 vulnerable households to offset rising fuel costs.
At the EU level, the focus is on protecting the hardest‑hit sectors. The European Commission has authorized state aid for agriculture, fisheries, and transport.
French President Emmanuel Macron has written to EU Commission President Ursula von der Leyen seeking a relaxation of European fuel quality standards.
Despite these measures, prices may continue to rise as the conflicts persist.
