Fuel prices in Portugal have climbed to record highs despite government tax relief measures aimed at cushioning motorists from rising energy costs, local media reported.

The latest increase pushed both diesel and gasoline prices to their highest levels on record, even after the government activated its mechanism to reduce the Petroleum Products Excise Tax (ISP).

Diesel prices rose by approximately 6.5 euro cents per litre, while gasoline prices increased by around 5 euro cents per litre.

Geopolitical tensions drive prices higher

Since the outbreak of the conflict involving Iran, fuel prices have risen sharply as geopolitical tensions have disrupted global energy markets.

Diesel prices have increased by more than 60 euro cents per litre, while gasoline prices have climbed by around 44 euro cents per litre, reflecting concerns over the security of the Strait of Hormuz—through which around 20 per cent of global oil and natural gas trade passes—as well as attacks affecting refineries in the context of the war in Ukraine.

Government extends support measures

Finance Minister Joaquim Miranda Sarmento said the government's fuel support measures would remain in force "for some time," adding that any future review would depend on developments in the Middle East.

Rather than reducing value-added tax (VAT) on energy products, the government intends to continue targeted income support measures.

Lisbon has extended its 10-euro-cent-per-litre subsidy for professional diesel until the end of the year and reinstated a 38-million-euro support package for taxi operators, firefighters and organizations in the social sector.

The government also plans to ask parliament to extend until 31 December the temporary mechanism allowing reductions in ISP rates on gasoline and diesel to offset additional VAT revenues generated by higher fuel prices.(ILKHA)