French petrol prices reach record highs amid ongoing conflict in Middle East

Petrol prices in France are now at all-time highs as the tensions in the Middle East continue to impact prices. 

Average prices of €2.12 per litre for SP95-E10 were recorded on Wednesday (September 9), the highest ever, according to Radio France estimations based on government data. The previous high of €2.09 per litre was recorded in 2022, impacted by the war in Ukraine.

An average of €2.21 per litre for SP98 is also the highest ever, beating the previous record of €2.19 also set in 2022. 

Diesel prices (gazole) are averaging €2.29 per litre midweek, a little behind the €2.31 peak recorded in April this year, but have been steadily rising alongside petrol prices for weeks. Note, the graph below only shows weekly averages up to September 4, and does not include the new record highs.

Following a sharp increase in fuel prices in March and April following the outbreak of tensions in the Middle East, oil prices have fluctuated, impacting costs at the pumps.

A spike in crude oil prices is often quick to cause a fuel price rise, but subsequent reductions can take several days, if not weeks, to reach consumers, sometimes being missed altogether by a new rise in crude oil costs.

The closure of the Strait of Hormuz, a vital waterway that transports up to a fifth of the world’s crude oil and natural gas reserves, has impacted prices for several months. 

A brief period of respite in the conflict at the start of summer quickly ended, and both sides have carried out several aggressive acts in August and September.

The most recent of these – airstrikes by Iran on bases in Jordan and ships in the Strait this morning – has seen oil prices jump again today.

The price of a barrel of crude Brent oil – the benchmark – reached $100, the highest since the end of July. Before the conflict, prices were around $70 per barrel. 

The French government will meet with industry leaders today to discuss the national response to the crisis, however there is no indication of prices dropping anytime soon.

Up to a month of annual earnings on fuel 

Fuel prices made headlines at the beginning of the year, as the sudden increase in prices took governments and drivers equally by surprise.

Countries across Europe took various measures to limit the increase, from temporary cuts to VAT on fuel, to limits on daily fuel purchases.

Prices fell in May and June, but since July have slowly increased by a few cents per litre each week, now overtaking the previous records.

In response to the price rises, in late July service station giant TotalEnergies reinstated its €1.99 per litre cap on petrol at all its service stations, and a €2.25 per litre cap on diesel. Those price caps are ongoing.  

This gradual increase in fuel costs has an impact on household income in France. 

Estimates from national statistics body Insee suggest that around a fifth of French households, over five million, spend at least a month of their annual income on fuel alone – excluding other vehicle costs – forcing them to cut back in other areas and ultimately harming the economy. 

These households are primarily located in more rural areas, where vehicles are necessary for daily living.

Steep fuel prices have made electric vehicles an increasingly attractive option, particularly with the government’s new purchase aid. 

Price cap called for

More widely, the switch to electric is being backed by industry leaders, including Michel-Edouard Leclerc, head of the E.Leclerc supermarket chain.

“At [supermarkets] E.Leclerc, Système U, and Carrefour, we are going full steam ahead with electric power. Oil will always be unpredictable; there will always be conflict. Let’s switch to electric,” he said in an interview with radio station Europe 1 yesterday. 

In the short-term, he called for a cap on fuel prices to prevent further instability. 

“We are reaching the peak of a cycle… At some point, the burden on growth, particularly for the agricultural sector, will become so heavy that public authorities will be forced to cap prices,” he said, without giving an exact limit of when they should be capped. 

He also highlighted the high cost of fuel taxes – up to 60% of the cost of fuel for the consumer goes towards taxes – that could be reduced to temporary lower costs during the crisis.

Fuel aid extended

The government has, so far, ruled out such measures. 

Both a price cap and a reduction in fuel taxes would cost the state billions on the eve of a budget focused on cutting France’s deficit and debt. 

The government previously mulled a cap on fuel margin profits, but this has not been implemented. 

The main policy promoted by the government, its €100 fuel aid for those who drive for work or commute long distances, has been extended to the end of September. The aid can only be obtained once per driver. 

Drivers can check fuel prices at stations around them using the government’s price comparison website.