Fuel prices in Europe, especially diesel, are rising amid the war in the Middle East and supply disruptions, increasing pressure on households, transporters, and farmers ahead of the harvest season.
According to Eurostat, in July diesel fuel in the EU rose 4.3% compared to June, with significant price increases recorded in 17 of the 27 bloc countries.
After the signing of a memorandum between the US and Iran in early July, prices fell somewhat, then rose again after the resumption of escalation in the Middle East.
Diesel rose most sharply in Poland - by 13.4%, Germany - by 12.7%, and Greece - by 12.1%. On an annual basis, fuel and lubricant prices in the EU in July were 16.9% higher than a year earlier, according to a European Commission statement.
Growth continues in August. According to the European Commission's oil bulletin, the average diesel price in the EU on August 17 was about 2.03 euros per liter, and in Germany - 2.27 euros.
In France, one of the EU's largest agricultural producers, the average retail diesel price reached 2.23 euros per liter as of August 17, up more than three cents in a week. Since early July, the price has risen by about 37 cents after a brief drop to 1.86 euros per liter.
In Spain, diesel reached about 1.86 euros per liter on August 26, continuing its rise from 1.57 euros in mid-July. Spanish authorities are extending support measures for agricultural producers until the end of September, including compensation for diesel fuel costs.
Italy is also forced to respond to rising prices: the government is extending the reduction of the diesel excise tax, trying to ease pressure on consumers.
In Poland, authorities have re-introduced temporary measures to reduce the tax burden on fuel, while farmers in August are submitting applications for a diesel excise tax refund for agricultural use.
For European agriculture, the rise in diesel costs is particularly sensitive in late summer and early autumn, when farmers use large amounts of fuel for harvesting, transportation, and primary processing of crops.
In France, grain harvesting is already finishing in August, while in Germany agricultural producers have started harvesting after an abnormally hot and dry summer.
The European diesel market is under pressure not only from oil prices. The International Energy Agency (IEA) notes that disruptions in oil product exports from the Middle East and attacks on Russian refineries have led to a reduction in diesel supply. Exports of diesel from Russia, the Middle East, and Asia in July were about 1.3 million barrels per day lower than a year earlier - about 20% of global seaborne diesel supplies.
On the European wholesale market, the situation is particularly tense. The price of diesel delivered to Europe has exceeded the price of jet fuel for the first time in more than a year, reflecting a shortage of middle distillates, Reuters reports.
Media also report that on the wholesale market in Rotterdam, a tonne of diesel already costs more than $1,250 - about 45% higher than the level after the truce and 70% higher than the start of the war.
An additional factor remains the situation around the Strait of Hormuz, a key route for global oil and oil product supplies. The IEA notes that the actual closure of the strait and disruptions to maritime transport have led to a sharp reduction in exports from the region and depletion of global inventories.
The price increase could be particularly painful for European farmers this year. The European Commission has already lowered yield forecasts for several summer crops due to heat and drought: the most affected are France, southern Germany, northern and central Italy, Austria, the Czech Republic, Slovakia, Hungary, and western Romania.
Thus, farmers are entering the harvest campaign amid rising fuel costs and worsening crop prospects, increasing the risk of further increases in production and transport costs and, ultimately, higher food prices.
