Portugal plans diesel subsidy to offset Iran war fuel costs
Portugal plans a temporary diesel subsidy for key sectors to mitigate rising energy costs. The 450 million euro measure will run from April through June 2026.
The government of Portugal has proposed a temporary diesel subsidy of 10 euro cents per litre to support key industries as energy costs rise due to the conflict in Iran. This measure is specifically designed to assist agriculture, forestry, fishing, and public transport, including taxis, which have been heavily impacted by the recent volatility in fuel markets.
The subsidy program is estimated to cost up to 450 million euros ($519 million) over its three-month duration. It is scheduled to run from April 1 to June 30, pending approval from parliament. To ensure the support is targeted, the government stated that the 10-cent-per-litre relief will only apply if diesel prices remain at least 10 cents above the average price recorded during the first week of March, when military activity in the region intensified. Additionally, the subsidy will be subject to a fixed consumption limit per vehicle.
Prime Minister Luis Montenegro underscored the importance of maintaining fiscal stability while providing this temporary relief.
The support was temporary and highlighted the need to continue managing the state budget responsibly and prudently.
According to the National Statistics Institute (INE), the country is currently in a strong fiscal position, having recorded a budget surplus of 0.7% of gross domestic product last year, up from 0.6% in 2024. The government currently projects a surplus of 0.1% for 2026.
While officials are exploring further measures in the event of a broader escalation in the Middle East, there are no immediate plans to reduce VAT on fuel or food products. The administration remains focused on monitoring the impact of the conflict on essential goods and fuel prices.
