End of Special Consumption Tax Reduction in Romanya: Fuel Prices Rushing to the Peak

A significant increase in fuel prices is expected in Romanya as of 1 Temmuz. The special consumption tax (ÖTV) reduction introduced in the country during the previous period will end on 30 Haziran, and this will directly reflect at the pump. According to expectations, diesel prices in particular will increase by more than 30 bani per liter. Since the mentioned tax reduction constitutes more than a quarter of the liter's price, its impact will be highly significant. Therefore, drivers and the transportation sector will face a serious cost increase at the beginning of the summer months.

The mentioned reduction measure was put into effect by the Ilie Bolojan government, which was dismissed at the beginning of Nisan. The main rationale behind the government's move was to balance the fuel price increases caused by international developments. During the same period, the government provided an additional incentive by reducing the solidarity contribution for companies in the energy sector. When the two measures were implemented together, they provided a price reduction of approximately 0,36 RON per liter, including VAT. Thanks to this, consumers felt a sense of relief in the market, even if only for a short time.

However, there is an important political reason why the price increase seems inevitable in the coming weeks. Since the current government has an interim (acting) structure, it lacks the legal authority to extend the mentioned measure. For the measure to be reinstated, a new government must be formed and officially approve the decision. However, the ongoing negotiations between political parties and president Nicușor Dan have currently resulted in a deadlock. While uncertainty remains as to when this political crisis will be overcome, consumers will continue to be directly affected by the prices.

Market data also reveals the gravity of the situation. On Monday, 29 Haziran, a liter of diesel was trading at 9,24 RON in Romanya. Following the expiration of the ÖTV reduction, this price is expected to exceed the 9,50 RON threshold. On the other hand, the ongoing peace negotiations between ABD and İran have led to a decrease in prices in international oil markets. However, the local tax regulation in Romanya seems likely to prevent this positive global trend from being reflected to the consumer. The tax increase in the domestic market completely overshadows the positive effects of the decrease in international markets.

The latest Weekly Oil Bulletin data published by the Avrupa Komisyonu on 11 Haziran reveals the situation in Romanya more clearly. While gasoline prices in Romanya are already tracking above the European average, diesel prices are also at a level very close to the average. These figures clearly show that the country has one of the most expensive fuel markets within the European Union. While prices averaging 1,82 euro for gasoline and 1,83 euro for diesel apply across the EU's 27 members, gasoline is trading at 1,823 euro in Romanya. A striking detail is how much this picture has changed for Romanya, which, until a few years ago, was positioned as Europe's cheapest fuel market alongside Bulgaristan.