Portugal to Release Oil Reserves Next Week as Fuel Prices Spiral

Portugal will begin releasing 10 percent of its strategic petroleum reserves next week, joining a coordinated international effort involving more than 30 countries to tame crude oil prices that have surged over 50 percent in a single month.

Energy Minister Maria da Graca Carvalho confirmed the decision on Friday, saying the country had signed on to the International Energy Agency's recommendation for a record coordinated release of 400 million barrels across OECD nations. "We will release reserves in a coordinated fashion with other countries, because doing it alone has little effect," the minister told reporters.

A Fast-Moving Crisis

The announcement marks a sharp escalation in Portugal's response to the energy shock triggered by the war in the Middle East. As recently as March 11, Carvalho had said the release would only go ahead if prices kept climbing. By Friday, with Brent crude trading above 111 dollars per barrel and rising more than 2 percent on the day, the government had run out of room to wait.

At the pump, Portuguese consumers have already absorbed punishing increases. Diesel has risen by 33 cents per litre and petrol by more than 17 cents since the conflict began. Next week promises no relief: diesel is expected to jump another 16 cents per litre, with petrol climbing a further 9 cents.

Crisis Declaration on the Table

In a striking shift from the government's earlier messaging, the energy minister acknowledged that Portugal is now approaching the threshold to formally declare an energy crisis. "We are getting close to the criteria under which we can declare an energy crisis," she said, adding that the prime minister and the full cabinet are analysing a package of measures to protect families and businesses.

The remark was notable given that just 24 hours earlier, Presidency Minister Antonio Leitao Amaro had said the country was "far" from that threshold, underscoring how rapidly the geopolitical situation is shifting.

Looking Across the Border

The divergence with Spain is becoming politically uncomfortable. Madrid has already slashed VAT on fuel, electricity and gas from 21 percent to 10 percent, a move that Portuguese families and opposition parties are watching closely. Carvalho declined to comment directly on whether a similar VAT cut is under consideration, saying only that her team is "quantifying" the cost of various protective measures.

She noted that diesel is the hardest-hit fuel, largely because refining is concentrated in the Middle East conflict zone. On electricity, the minister offered a more reassuring note: Portugal's grid is "relatively protected" thanks to an 80 percent share of renewables.

What It Means for Residents and Expats

For the thousands of foreign residents who depend on cars in Portugal's less well-connected regions, the fuel price spiral is a direct hit to household budgets. Those on fixed incomes, including many retirees who relocated under the former Non-Habitual Resident tax regime, face a squeeze that no amount of sunshine can offset. Whether the government moves to a formal crisis declaration, and what relief measures follow, may determine how many view the cost-of-living equation in Portugal heading into summer.

Read more: Spain's 30-Cent Fuel Tax Cut