Petroleum product stocks in Europe have fallen to critically low levels, and supply disruptions from the Middle East and Russia are prompting governments to intervene in the fuel market. Germany, Czechia, and Italy are already taking emergency measures to curb prices, while Latvia has reduced the fuel excise tax to the minimum level permitted in the EU.
According to BNS, the European fuel market is under pressure from several factors. The conflict between the US and Iran disrupts the operations of oil refineries in the Persian Gulf region, Russia has extended its ban on diesel fuel exports, and outages at refineries further reduce the available volumes of petroleum products.
According to Indrek Sassi, head of fuel pricing at Circle K, global diesel fuel supplies are currently 1.3–1.4 million barrels per day lower than a year ago. As a result, Europe has approached the traditional autumn maintenance season for refineries with minimal resilience.
The situation is so tense that oil refining companies are revising their plant maintenance plans. European refineries of TotalEnergies are operating at nearly full capacity, and the company's CEO Patrick Pouyanné described their current operations as a "gold mine." Due to high margins, TotalEnergies has postponed maintenance at its Gonfreville plant in northern France to the spring.
Meanwhile, European governments are trying to prevent a sharp rise in fuel prices at gas stations.
From October 1, Germany has reduced the energy tax on motor fuel by 14.04 cents per liter. The measure will be in effect until the end of the year. In addition, the country's authorities plan to introduce a price cap on fuel no later than January 1, 2027.
Czechia is reducing the excise tax on diesel fuel and capping retail prices from October 1 to 31. Additionally, the introduction of a temporary emergency tax for the country's only oil refining company, Orlen Unipetrol, is being considered.
In Italy, major gas station networks have joined in on price capping. Eni has set a maximum price for diesel fuel at 2.19 euros per liter and gasoline at 1.99 euros for 30 days starting September 28. Since March, the Italian government has already approved 15 aid packages totaling over 2.3 billion euros.
Latvia has also decided to reduce the tax burden on motorists by lowering the fuel excise tax to the minimum level permitted by EU rules.
In Estonia, representatives from the fuel and other sectors are urging the government to follow the example of its neighbors. According to Sassi, a temporary tax reduction could alleviate the energy crisis and prevent a situation where high fuel prices severely impact households and businesses.
However, the risk of further price increases remains. US President Donald Trump is considering limiting diesel fuel exports to lower domestic prices. According to Goldman Sachs, a complete ban on US exports could raise European diesel prices by about three dollars per barrel, or nearly 2%.
Additional pressure has emerged from China. Reuters reported that Beijing has suspended fuel exports and canceled previously agreed October shipments of gasoline and aviation kerosene.
One option for stabilizing the market is now the use of strategic reserves. EU leaders are expected to discuss the possibility of utilizing emergency reserves on October 15. However, according to Sassi, the situation with gasoline reserves is particularly concerning, as they are significantly lower than diesel fuel reserves.
According to the European Commission, stocks of petroleum products in the key European hub of Amsterdam-Rotterdam-Antwerp are currently below the average level of the last five years, although the situation has remained relatively stable in recent weeks.
Thus, Europe enters autumn with an extremely low level of resilience in the fuel market. Any new supply disruptions, refinery shutdowns, or export restrictions could quickly reflect on the prices of gasoline and diesel at European gas stations.
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