Spain applies a 20-cent fuel discount as Portuguese diesel approaches a record

Two neighbouring responses to the fuel shock

Spain has introduced a discount of €0.20 per litre on road fuel as Portugal prepares for diesel prices to reach a record level, Euronews reported on September 12. Spanish diesel was quoted at about €1.795 per litre, the European Union’s second-lowest level after Malta, while Portugal’s average diesel price was forecast to reach roughly €2.15 on Monday.

The divergence reflects different tax decisions during a renewed oil-market shock. Portugal adjusted its petroleum-products tax relief on Friday, but the measure was expected to reduce the coming petrol increase by only about one cent per litre. Diesel relief was described as just 0.10 cents per litre. Petrol was therefore forecast to fall by five cents rather than six, while diesel continued upward.

The resulting price gap is creating a substantial incentive for Portuguese drivers and haulage operators near the frontier to refuel in Spain. Euronews calculated that the difference could reach 30 to 40 cents per litre. For a commercial vehicle with a large tank, that disparity can materially shift purchasing across the border and redirect fuel-tax revenue between the two countries.

An EU framework behind Spain’s measure

Spain’s ability to reduce fuel excise duties sits within an EU approval process. An August 20 European Commission proposal sought a Council implementing decision authorising Spain to apply reduced excise rates to diesel and unleaded petrol used as motor fuels. The proposal cited sharp, persistent wholesale and retail energy-price increases arising from Middle East geopolitical disruption and risks to households and businesses.

The Commission’s Weekly Oil Bulletin provides a common reference for comparing national prices and taxes. Its September 10 release includes consumer prices with and without taxes, diesel maps and country-level duties. This official dataset supports the regional comparison framework, although the latest Portuguese forecast and Spain’s reported retail discount come from the September 12 Euronews report.

What to watch

The immediate question is whether Portugal expands relief if diesel reaches or exceeds the forecast record. Governments must balance rapid consumer protection against lost tax revenue and the risk of blunting incentives to reduce fuel use. The durability of Spain’s discount will also depend on EU authorisation and on crude prices, which have been pushed above $100 amid war and restrictions affecting passage through the Strait of Hormuz.