The additional reduction in the Tax on Petroleum Products (ISP) takes the Government’s total support to around 23 cents per litre for both fuels, according to Minister of the Presidency António Leitão Amaro.

The diesel discount is slightly higher than three cents, while the petrol reduction is slightly lower, once VAT is taken into account.

The move comes after forecasts suggested motorists could otherwise be facing increases of as much as 15 cents per litre for diesel and 12 cents for petrol this week.

According to the Automóvel Club de Portugal (ACP), diesel averaged €2.019 per litre on Friday, 4 September, while unleaded 95 petrol stood at €2.022.

Without the latest Government intervention, current market movements indicated those averages could have climbed to around €2.169 for diesel and €2.142 for petrol.

Actual prices at the pump will still vary between filling stations, brands and different parts of the country.

Government steps in as prices rise

Portugal has been using temporary reductions in ISP to cushion motorists from rapid changes in international fuel prices.

The mechanism allows the Government to adjust the tax burden rather than allowing the full impact of higher wholesale prices and the resulting additional VAT revenue to reach consumers.

Leitão Amaro said measures introduced since the beginning of the conflict involving Iran have already represented more than €300 million in Government support, including ISP reductions, professional diesel measures and assistance with bottled gas.

Prime Minister Luís Montenegro also addressed rising fuel costs on Friday, saying the Government understood the pressure they were placing on families and businesses.

The Government is now preparing to bring back extraordinary support for agricultural diesel, following a similar measure that ran until the end of June.

The important point for drivers is that the additional three-cent discount does not translate into petrol or diesel becoming three cents cheaper than last week.

Instead, it reduces the size of an increase that was already expected because of movements in international fuel markets.

How much motorists actually pay will become clearer as filling stations update their prices this week.