Energy Shock Drives Fuel Prices and Inflation

Diesel has become Europe’s most expensive fuel, reaching a weighted EU average of €2.226 per litre on 21 September 2026, its highest level since records began in 2005. The price was 13.4 cents above Euro-super 95 petrol, even though diesel is taxed less: average diesel taxes were €0.861 per litre, compared with €0.981 for petrol. The article links diesel’s sharp price rise—around 40% since late February—to the war with Iran, disrupted flows through the Strait of Hormuz and constrained global refining. ECB experts say refining margins accounted for €0.41 per litre in the third week of September, and identify peace, restored shipping and normalised refining as key conditions for prices to fall. EU rules set a lower minimum excise duty for diesel than petrol, and many governments preserve the difference to support hauliers, farmers and other businesses. A proposed EU shift to taxing fuels by energy content rather than volume would have removed diesel’s tax advantage, but member states failed to agree unanimously in November 2025. The article ranks the ten EU countries with the highest diesel taxes per litre, measuring the amount paid rather than the tax share of pump price. Denmark leads at €1.081 per litre, followed by Italy at €1.034 and Finland at €1.030. Greece is tenth at €0.855. The ranking also highlights different tax systems, including excise duties, carbon charges and VAT; VAT is applied to the price inclusive of excise. The Netherlands has the EU’s highest diesel pump price but ranks sixth for tax. Germany’s ranking is set to change after an approved temporary tax cut, while Czechia and Spain are also providing fuel-tax relief. The article notes that record prices may prompt further government changes to fuel duties.

Italy’s annual inflation rate rose to 4.2% in September, up from 3.3% in August, according to preliminary estimates from the national statistics agency Istat. The consumer price index increased 0.7% month on month. The rate is the highest since September 2023, when inflation reached 5.3%, and the article links the latest rise chiefly to higher energy prices amid disruption caused by the Iran war. Inflation is also accelerating in Spain. Energy goods were the main driver: their annual price increase accelerated from 17.1% to 22.3%. Regulated energy rose 25.9% year on year, while unregulated energy rose 22.2%. Fresh, unprocessed food prices also picked up, reaching 5.5% annual growth. Prices for recreational and cultural services and transport-related services increased more moderately. Core inflation, excluding energy and fresh food, edged up from 1.5% to 1.7%, suggesting price pressure remains concentrated in energy and fresh produce. Goods inflation accelerated more sharply than services inflation. The harmonised consumer price index rose 4.1% annually and 2.0% month on month, partly reflecting the end of summer sales. The article describes how rising prices affect households’ purchasing power and confidence, recalling Italy’s experience of double-digit inflation in the 1970s and 1980s while noting that today’s levels remain far below those peaks. Fuel prices eased slightly, but averages remained high and varied substantially by retailer; some major operators introduced price caps. Istat also recorded declines in confidence: the consumer index fell from 94.5 to 91.2, and the business indicator from 97.0 to 95.9. The article warns that weaker confidence could prompt families to delay discretionary spending and businesses to hold back on hiring and investment, contributing to an uncertain economic outlook.

The United States is urging European countries to release more emergency oil reserves as crude and diesel prices rise amid disruptions to global supply. Washington announced that it would release an additional 40 million barrels, while Energy Secretary Chris Wright said several European countries had released only a fraction of the oil they pledged. The appeal comes as the Trump administration weighs a 90-day ban on diesel exports to help restrain domestic fuel prices before November’s midterm elections. US diesel has reached $7 a gallon, and Brent crude has traded between $97 and $102 per barrel—$25 to $30 above pre-war levels. Shipping disruption in the Strait of Hormuz, tensions in the Gulf of Aden, and attacks on Russian refineries have contributed to the pressure. The International Energy Agency coordinated a 400-million-barrel release in March, with the EU contributing about one-fifth. IEA Executive Director Fatih Birol said another coordinated release was not a priority because roughly one-third of the previously pledged oil had yet to reach markets. He also said European countries had made significant efforts but retained crude and refined-product stocks. US Interior Secretary Doug Burgum said Europe had substantial diesel reserves that could be used. The IEA would normally oversee a coordinated release, with the European Commission coordinating EU member states. European emergency stocks are substantial but unevenly distributed. In May 2025, EU countries held 108.6 million tonnes, including crude, diesel and gasoil, and petrol. National reserves ranged from 178 days of net imports in Finland to 79 days in Czechia; comparable 2026 figures have not been published. Analyst Francesco Sassi warned that a US diesel export ban could raise costs for European consumers, businesses and governments, and prolong pressure to reconsider Russian energy supplies. Ireland’s energy minister, Darragh O’Brien, called such a ban unlikely because it would harm both sides of the Atlantic, but urged Europe not to be complacent. The article describes European governments as facing a difficult balance between using reserves and preparing for further supply disruption.