Fuel prices “will take time to return to pre-war levels” – minister

Minister of cabinet affairs, António Leitão Amaro, admits that he does not have any information that would allow him to predict when, or to what extent, a possible fall in international oil prices will be reflected in fuel prices in Portugal.

Asked at yesterday’s cabinet briefing whether the government can confirm forecasts of a fall in fuel prices from next week – following the signing of the agreement between the United States and Iran – he said he did not have that information “at this stage”.

“It is normal for the situation regarding sales, traffic through the Strait of Hormuz, and the flow of oil and its derivatives on the international market, and subsequently their impact on consumer prices, to take some time,” he stressed.

He also explained that “typically, this information begins to arrive on Fridays, in view of the changes that take place at the turn of the weekend into the following week” – adding that this data is usually communicated to the Ministry of Finance.

In Portugal, weekly changes to fuel prices are usually finalised on Fridays, based on the average oil price for the week. They then take effect the following Monday, giving people chances to ‘fill up’, or wait, (depending on the changes) over the weekend.

Leitão Amaro pointed out that the government has maintained the discount mechanism on the fuel tax (ISP) to offset the increase in tax revenue resulting from the rise in IVA (VAT) when fuel prices rise.

“We have always said that rises in fuel prices, driven by international factors, do not result in the government or the state collecting more revenue as a result,” he said.

“Essentially, we refund the excess IVA via the ISP, thereby protecting taxpayers from the greed that, in the past, under other governments, the state displayed with regard to fuel taxation,” he added.

But he did acknowledge that “the expectation is that, should the conflict ease and the Strait of Hormuz be opened without restrictions, the situation will develop accordingly”.

The signing of the Memorandum of Understanding between the US and Iran marks the start of a 60-day negotiation process aimed at reaching a definitive peace agreement between Washington and Tehran.

The document comes after months of conflict in the Middle East, triggered by the attacks launched by the United States and Israel against Iran on February 28.

However, differences remain regarding the scope of the agreement, with Tehran warning that Israeli attacks in Lebanon could constitute a breach of the commitments made under the understanding reached with Washington.

Everything is still open, in other words. But prices at the pumps are expected to dip significantly next week, diesel by more than petrol.

Source: LUSA