Cyprus has extended its reduced excise duty on motor fuels by two months to 31 August 2026, as the government moves to shield consumers and businesses from energy prices still running above normal levels in the wake of the Iran war, Government Spokesperson Konstantinos Letymbiotis announced on Wednesday.
The Council of Ministers approved the extension at a fiscal cost of approximately €12 million. The decision was taken in light of a declining trend in energy prices which nonetheless remain above normal levels due to geopolitical developments, Letymbiotis said.
What the cut means at the pump
The measure, first approved on 26 March, reduces the excise duty on motor fuels by 8.33 euro cents per litre — bringing rates to the minimum levels permitted under EU legislation. For petrol, the rate dropped from €0.429 to €0.359 per litre; for diesel, from €0.40 to €0.33 per litre, according to figures published at the time of the original announcement.
The cut was introduced after a sharp price spike recorded by the Retail Price Observatory in the period from 27 February to 26 March: the price of unleaded 95 rose by 20.2 euro cents per litre, from €1.314 to €1.516, while diesel surged by a record 34.8 euro cents per litre, from €1.410 to €1.758.
The Iran war backdrop
The price spike coincided with the global energy disruption triggered by the 2026 Iran war. The closure of the Strait of Hormuz — through which around 20% of the world’s oil trade passes — led the International Energy Agency to characterise the conflict’s impact as the largest supply disruption in the history of the global oil market, according to reporting on the crisis. Global gas prices surged by 30% as a result.
The Cyprus government referred to “geopolitical developments” as the driver of persistently elevated energy prices, without specifically naming the Iran war in its announcement.
The broader package
The fuel excise cut forms part of a wider government support package of 17 measures totalling €196 million, approved by the Council of Ministers to address the impact of elevated energy prices. The package includes 11 measures with direct fiscal impact totalling €141 million, and six housing policy measures worth a further €55 million, according to the gov.cy announcement.
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