Iran war sees energy prices in Portugal hit two-year high

For five consecutive months, energy prices for Portuguese consumers were below the previous year’s levels. But the war in Iran and the surge in fuel prices have reversed this trend. Portugal’s National Statistics Institute’s (INE) preliminary estimate, released on Tuesday, reveals that energy prices jumped 5.8% in March, the highest value in almost two years.

On Tuesday, the price of Brent oil closed at US$118 a barrel, although it fell back down to US$103 this morning (Wednesday, April 1) while in March the cost of Brent crude was up 63% overall – the biggest monthly increase ever. (Not even in the OPEC crisis in the 1970s did oil prices record such a large monthly overall increase).

You would have to go back to June 2024 to find a higher year-on-year variation (9.4%) than that now recorded in the consumer price index (CPI) for energy products. Explaining this sharp rise is the war in the Middle East.

The first month of the conflict, initiated by the United States and Israel, was enough to interrupt a continuous cycle of declines in energy prices that had been observed since mid-2023 – a year after the energy shock caused by the war in Ukraine. With this new impact, the energy price index is estimated to have jumped from -2.2% in February to almost 6%.

“The increase results fundamentally from an energy shock that is essentially geopolitical: the conflict in the Middle East, with a direct impact on the Strait of Hormuz, has significantly reduced global flows of oil and natural gas.

Added to this is the significant interruption of LNG [liquefied natural gas] production in Qatar,” explains economist João Queiroz of Banco Carregosa to Negócios, emphasizing that this shock occurs “in an already fragile context in Europe, with low levels of gas reserves.”

Regarding oil, the price of a barrel of Brent crude increased, on average, “about 40%” compared to February and “about 60% compared to the end of 2025,” according to economists Tiago Belejo Correia and Teresa Gil Pinheiro of BPI Research, in a note published this Tuesday. This translated into “average monthly increases in retail fuel prices of about 15% for regular diesel and 7% for regular 95-octane gasoline,” which the Government sought to mitigate through new discounts on the tax on petroleum products (ISP).

The rise in fuel prices was “almost entirely” responsible for the acceleration of inflation in March, according to the INE (National Institute of Statistics). The statistical authority reveals that, in March, the inflation rate accelerated, year-on-year, to 2.7%, six tenths higher than in February. In the food sector – which, along with energy, is one of the products most subject to large price variations – the CPI variation was also very high (6.4%), although there was a decrease of two tenths compared to the previous month.

Source: Negócios; Credits: Photo by Jan Zakelj for Pexels