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Date Published: 25/09/2023

Petrol in Spain creeps back towards the two euro mark

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Rising fuel prices threaten to hike inflation up further in Spain

Petrol in Spain creeps back towards the two euro mark

Drivers in Spain are sliding down a slippery slope as the cost of fuel continues to increase. After almost three months of consecutive hikes, the price at the pumps has risen to 1.751 euros per litre for diesel and 1.688 euros in the case of unleaded.

One of the main issues is the cost of raw materials. A barrel of Brent, which is the reference for oil prices in Europe, exceeded $94 this week, a figure not seen since November last year and a continuous upward path that threatens to cause new increases in inflation.

Since the end of June, the price of crude oil has jumped by 30% and forecasts suggest that it will reach $100 per barrel before the end of the year.

Those in the know blame two key issues for pushing up prices: an increase in demand and a fall in production by exporting countries.

"Right now the most important factor is the cuts that the producing countries are applying," explained Antonio Turiel, an expert in the oil market, who recalls that exporters have been turning off the tap for months with the aim of raising the price of raw oil.

But this can be counter-productive, and if the prices are allowed to grow too high, then demand will naturally fall.

"The equilibrium price they are looking for is a high price, but not too high, although it is increasingly difficult to obtain. We are entering a very delicate situation," Mr Turiel warned.

The knock-on effect for fuel in Spain

Skyrocketing crude oil has contributed to eleven consecutive weeks of fuel cost increases. Since petrol and diesel began their upward spiral at the end of June, they have risen by 10% and 16% respectively.

The most alarming impact has been on diesel, since it not only puts pressure on the ordinary driver but also on sectors like agriculture, transport and mining.

And if fuel costs continue to grow at this rate, they’ll undoubtedly drive up the already crippling inflation in Spain.

Economist Antoni Cunyat summed up the stark outlook: "If the fuel prices we have now remain the same for several more months, they will end up being transferred to the rest of the prices, because they make logistics more expensive, and that makes the entire chain more expensive."

Find all the latest motoring and transport news here or join our Driving in Spain Facebook group for regular updates

Image: International Petroleum Exchange

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