Fuel prices at the pumps are set to rise sharply again next Monday. Even after government discounts applied to the ‘Imposto sobre os Produtos Petrolíferos’ (ISP), a tax on petroliferous products which typically increases costs for the consumer, announced this Friday, 13th March. Petrol is expected to increase by 8.3 cents per litre and diesel by 9.1 cents.
Without this tax intervention, sources in the sector speculated that the increase would have been even steeper: around 11 cents per litre for petrol and 10.5 cents for diesel.
The government has once again resorted to the mechanism of a temporary reduction in the ISP to soften the impact of rising prices on consumers. According to a statement issued by the Ministry of Finance, a new extraordinary and temporary cut in the tax rates will be applied from Monday, 16th March, covering both road diesel and unleaded petrol.
The ministry said that “the ISP rates on road diesel and unleaded petrol will again be reduced through an extraordinary and temporary discount (following last week’s reduction) of 1.4 and 2.7 cents per litre, respectively”. The measure aims to return to taxpayers the additional revenue from Value Added Tax (VAT) that the state would otherwise collect as a result of higher fuel prices.
Because VAT is also levied on the ISP, the effective discount felt by consumers will be slightly greater than the nominal tax cut. In practice, the real savings will amount to roughly 1.8 cents per litre for diesel and 3.3 cents per litre for petrol.
The government stressed that this latest intervention follows a reduction in the tax already applied the previous week. Taking both adjustments into account, the executive estimates that the total accumulated savings for consumers will reach 6.1 cents per litre on road diesel and 3.3 cents per litre on petrol, compared with the average prices recorded during the week of 2nd to 6th March.
The application of this fiscal mechanism follows a rule previously defined by the government. Adjustments to ISP rates may be made by ministerial order whenever prices rise by more than 10 cents per litre compared with the average prices recorded during a reference week, in this case the period between 2nd and 6th March 2026.
In the case of petrol, that threshold ended up being exceeded due to the cumulative effect of recent increases relating to the ongoing conflict in the Middle East. Prices had already risen by around seven cents during this week and are expected to climb by a further 11 cents next week, prompting the government to activate the fiscal compensation mechanism once again.
Even with this intervention, the recent evolution of fuel prices continues to reflect international instability and pressure on the oil market. Analysts in the sector acknowledge that volatility could persist in the coming weeks, depending on developments in the Middle East and on the potential impact that the closure of the Strait of Hormuz may have on global oil supplies.
For consumers, the immediate outcome will be another notable increase in prices at the pumps from Monday, albeit slightly mitigated by the extraordinary reduction in the ISP decided by the government.
Source: JN
