The prices of fuels are set to decrease at the beginning of the coming week, although not as significantly as predicted earlier by the Automobile Club of Portugal (ACP), due to a reduction in government tax discounts.
Forecasts had initially pointed to a decrease in the price of diesel by around seven cents, while gasoline was expected to drop by 3.5 cents.
However, the government reduced the existing discount on the Tax on Petroleum Products (ISP), applicable to unleaded gasoline and road diesel, thus offsetting part of the anticipated fuel price drop for the following week.
According to a decree published on Friday evening in the Diário da República, effective from Monday, the ISP rate applicable in mainland Portugal to gasoline with a lead content of 0.013 grams per liter or less will be 497.52 euros per 1,000 liters, compared to the current 481.26 euros.
The ISP rate for diesel will rise from the current 337.21 euros to 361.60 euros per 1,000 liters.
Calculations…
According to ACP estimates, these amounts represent an effective increase in tax per liter of about 1.6 cents for gasoline and more than two cents for diesel.
With the ISP increase, these reductions are expected to be around five cents and two cents per liter, respectively.
The government states that this revision aligns with the European Commission’s recommendations, which advocate for the gradual elimination of “exceptional and temporary” measures as energy market conditions allow, to mitigate fuel price increases that happened due to the COVID-19 pandemic and the Russian invasion of Ukraine.
“In this context, the present decree partially reverses the extraordinary and temporary measures, updating the ISP unit rates on gasoline and diesel, promoting the necessary gradual reversal of temporary measures adopted under the ISP,” the document states.
This comes at a time when basic diesel is at 1.634 euros per liter, while basic gasoline 95 costs 1.720 euros per liter, according to the latest average prices updated by the Directorate-General for Energy and Geology (DGEG) on the Fuel Prices Online website.
These average daily prices are determined based on prices reported by fuel stations, weighted with the quantities sold in the last known period, incorporating discounts offered at fuel stations such as fleet cards and others.
How is oil behaving in international markets?
The price of a Brent barrel for delivery in January ended on Thursday in the London futures market up 0.33%, at 63.34 dollars.
North Sea oil, a benchmark in Europe, closed the session at the Intercontinental Exchange trading 21 cents above the 63.13 dollars it closed at on Wednesday.
European crude maintained its upward trend, but investors are cautiously evaluating the implications of a potential agreement between Ukraine and the Russian Federation, which could reduce sanctions on the Russian oil sector and increase global supply at a time when demand is cooling.
Analyst Fawad Razaqzada noted in his bulletin today that a more relaxed geopolitical situation and an end to the war in Ukraine could mean lower prices.
Early last week, Razaqzada suggested that Brent prices could fall below 60 dollars.
“Without a convincing catalyst to sustain price increases, the general outlook for crude remains low. Any confirmed peace agreement could potentially return more Russian barrels to an already oversupplied global crude system, limiting the bullish trend and posing a downside risk,” he stated today.
