The ongoing unrest in the Middle East has triggered a global energy crisis, with oil prices soaring, at one point surpassing $100 per barrel. In response, several governments have implemented fuel price caps to mitigate the impact on their economies and citizens.
To date, Cyprus has yet to make a decision regarding price caps on fuel or other measures, such as reducing taxes. However, according to information received by Phileleftheros, the issue remains under consideration. Sources indicate that the situation is being closely monitored, and decisions will be made if necessary to contain fuel price increases.
Fuel price increases expected
Recent data shows that the average price of gasoline in Cyprus has reached €1.378 per litre, while diesel is priced at €1.508 per litre, marking a rise of around two cents compared to prices before the Middle East flare-up.
It is worth noting that these modest increases are not directly related to the conflict but stem from initial concerns about potential disruptions, which later materialised. Savvas Prokopiou, President of the Cyprus Fuel Station Owners Association, warned that consumers should expect further price hikes in the coming period, particularly if the conflict does not de-escalate soon.
Countries implementing fuel price caps
Several countries, including Greece, Croatia, Hungary, South Korea, and Thailand, have already introduced some form of price caps or profit margin limits on fuel prices.
In Greece, where a cap on profit margins has been set, gasoline prices have exceeded €1.85 per litre, while diesel costs over €1.82 per litre. In Croatia, fuel prices have been capped at €1.50 per litre for gasoline and €1.55 per litre for diesel, while Hungary has set caps at €1.51 per litre for gasoline and €1.56 for diesel. South Korea has also imposed a price cap, with gasoline priced at around €1.28 per litre and diesel at €1.30 per litre.
In Germany, the government has introduced a policy allowing fuel stations to increase prices only once per day, aiming to prevent profiteering amid rapid price hikes following the Iran conflict. Finance Minister Katharina Reiche commented, “It has been observed that fuel prices rise extremely quickly when oil costs go up, but when costs decrease, prices drop much more slowly.”
Cyprus’ history with price caps
Cyprus has only imposed a fuel price cap once, in 2010, under the presidency of Demetris Christofias and Commerce Minister Antonis Paschalides. The decision to set maximum fuel prices led to significant backlash from stakeholders, with many fuel stations either lacking enough stock or operating inefficiently, causing long queues and inconvenience for consumers.
However, the government has intervened on several occasions to curb significant price hikes in other ways. The most recent intervention came in March 2022, following Russia’s invasion of Ukraine, which triggered another energy crisis. The government, with the approval of the House of Representatives, amended the Excise Tax Law to reduce taxes on gasoline and heating oil. The reductions amounted to about 8.3 cents per litre for motor fuels and 6.4 cents for heating oil.
Given the ongoing energy concerns, it is possible that similar measures could be taken in 2026 if fuel prices continue to rise. However, as noted earlier, implementing price caps in Cyprus could affect imports and retail sales due to the country’s unique circumstances, potentially creating other logistical challenges.