Escalation in the Middle East pushes diesel price in Austria above the 2-euro mark

Price increase on a weekly comparison

The trigger for the latest increase in prices is the renewed escalation in the Iran war, which is having an immediate impact on international oil markets. The price of crude oil of the reference grade Brent rose to more than 100 US dollars per barrel (159 liters) on Thursday, according to reports from the Deutsche Presse-Agentur.

The political debate about an effective price brake is flaring up again as a result. The 10-cent fuel price brake introduced in April, which consisted of a reduction in the mineral oil tax (MÖSt) and a margin cap, was gradually reduced in the following months. Following a reduction of 1.7 cents per liter in June, the MÖSt reduction for July amounts to only 0.8 cents per liter as part of a monthly ordinance.

Trigger: Brent crude above 100 dollars

The Austrian Trade Union Federation (ÖGB) is therefore insisting on reintroducing an effective margin regulation. For example, the ÖGB recently insisted on reintroducing a "wirksame Margenregelung", at least for diesel and heating oil.

Pressure on the oil companies is also mounting internationally. In France, the energy group Total has announced that it will cap the price of gasoline at 1.99 euros and diesel at 2.25 euros per liter. On three weekends in the holiday month of August, when particularly large numbers of people travel, this cap will also apply to diesel at 1.99 euros. The maximum prices apply at the group's around 3,300 filling stations in France.

Political debate about the fuel price brake

French Prime Minister Sébastien Lecornu had previously called on the French energy giant in clear terms to allow consumers to participate "auf schnellem und einfachem Weg" in its sharply increased profits in view of the energy crisis.

The Austrian federal government is coming under growing pressure to act. SPÖ, ÖVP and NEOS, as governing parties, must decide whether to extend the gradually expiring price brake or replace it with a new instrument. The opposition as well as the social partners are demanding noticeable relief, especially for diesel and heating oil.

France: Total caps fuel prices

Consumers are also reacting with growing concern. Many commuters, whose vehicles depend on diesel, are facing sharply rising monthly costs. In addition, there are logistics companies and farmers for whom diesel is a central factor of production.

Market observers point out that a sustained Brent price of more than 100 dollars per barrel will further narrow the room for maneuver for politicians. Every additional dollar on the world market is reflected at domestic fuel pumps within days, according to industry circles.

The next few days are considered to be indicative. If the situation in the Middle East conflict does not calm down, analysts expect a further rise in fuel prices. Conversely, a diplomatic solution could ease the pressure on the oil market and thus on end-customer prices.

Impact on households and the economy

The development also affects inflation statistics. Fuels have an above-average weight in the consumer price index in Austria. An increase in fuel prices by several cents per liter therefore has a direct impact on the inflation rate and could undo the progress recently made in combating inflation.

Observers also point out that the price brake has lost its effectiveness in its current form. Since the MÖSt reduction is set anew each month by ordinance, the extent of relief depends directly on political decisions. Critics are therefore calling for a legally fixed model that does not need to be readjusted monthly.

Outlook: when will the market ease?

Regardless of the political debate, mobility behavior remains a lever for consumers in the short term. Those who bundle their shopping, switch to public transport or form car pools can at least mitigate the financial effect of the price increases.

The coming weeks will show whether politicians will respond with a renewed tightening of the price brake or whether they are relying on a market equilibrium with falling oil prices. One thing is already clear: the 2-euro mark for diesel is not just a statistical value, but a noticeable financial burden for many households in Austria.