Oil Hits $100 as Hormuz Crisis Deepens, and Portugal's Drivers Are Paying the Price

Brent crude surged past $100 a barrel on Monday for the first time since Russia's invasion of Ukraine, as the fallout from the US-Israel war on Iran continued to choke global energy markets. For Portugal -- a country that imports every drop of oil it consumes -- the consequences are already arriving at the pump.

A Record Week at the Pump

Portuguese drivers woke up on Monday to the sharpest single-week fuel price increase in the country's history. Diesel, the dominant fuel in Portuguese transport, jumped by roughly 20 centimos per litre even after the government intervened with an emergency cut to the ISP (Imposto sobre os Produtos Petroliferos) worth 3.55 centimos per litre. Without that fiscal cushion, the increase would have been 23.4 centimos. Petrol rose by 7.5 centimos, with no ISP relief. For broader context, see the ACAP April 2026 car-market read with Peugeot leading and Tesla April volume down 32.8%.

The government framed its ISP adjustment as revenue-neutral, redirecting additional IVA (VAT) gains generated by the higher prices back to consumers. But analysts and fuel industry sources told Observador that the state's actual windfall from IVA was closer to five centimos per litre -- meaning the discount covers only part of the extra tax revenue, not all of it. Prime Minister Luis Montenegro, speaking from a bilateral summit with Spain's Pedro Sanchez in Huelva, said the government would "continue to monitor" the situation and left the door open to further measures in cooperation with neighbouring countries.

Why Diesel Is Hit Hardest

The price disparity between diesel and petrol reflects a structural vulnerability in the European energy market. Europe is a net importer of refined diesel, and the closure of the Strait of Hormuz to commercial shipping -- now in its second week -- has cut off Middle Eastern refineries that supply a significant share of the continent's diesel. The refined product's price on European spot markets spiked far more than crude itself, and Portugal, where diesel powers the vast majority of commercial freight and a large share of passenger vehicles, feels the impact acutely.

A Structural Problem, Not Just a Crisis

The environmental association Zero seized the moment to argue that Portugal's suffering is largely self-inflicted. In a detailed policy statement released over the weekend, Zero pointed out that the transport sector accounts for roughly 34 percent of national greenhouse gas emissions and remains almost entirely dependent on imported fossil fuels. Sales of fossil fuels for road transport actually rose 0.7 percent in 2025 compared to the previous year, despite a 25 percent increase in electric vehicle registrations.

Zero's prescription goes beyond the current crisis. The association called for the progressive allocation of ISP revenues to fund public transport electrification -- buses, taxis, ride-hailing fleets, and urban freight vehicles -- arguing that these high-mileage vehicles offer the fastest route to cutting both emissions and oil dependence. A single electric bus, they noted, can displace 30,000 to 40,000 litres of diesel per year.

The association also flagged Portugal's chronic infrastructure gaps: delayed rail improvements on CP and Fertagus commuter lines in the Lisbon and Porto metropolitan areas, and a public EV charging network that remains too patchy to give buyers confidence.

For anyone living in Portugal who drives to work, runs a business that depends on deliveries, or simply buys groceries that arrive by truck, the arithmetic is simple. Every centimo added to diesel flows through the entire supply chain. The current spike may be driven by geopolitics beyond Lisbon's control, but the degree to which it hurts is a function of choices made -- and not made -- over decades.

Goldman Sachs warned on Sunday that without a resolution to the Hormuz standoff, oil could reach $150 a barrel by the end of March. For Portugal, that scenario would not merely be painful. It would be a full-blown economic emergency.