At a time when international oil markets are once again feeling the strain of renewed tensions between the United States and Iran, the Greek government is moving to keep prices at the pump in check.

The measure, announced by Prime Minister Kyriakos Mitsotakis from the floor of Parliament, is set to remain in effect until the end of August. It provides for a discount of 10 cents per litre on 95-octane unleaded petrol, though not on premium 100-octane petrol, along with a 5-cent discount per litre on diesel.

Official announcements are expected early next week, allowing the measure to take effect immediately afterwards and cover most of the roughly 45-day peak summer travel period.

The initiative will be funded by Greece’s two oil refining groups, Helleniq Energy and Motor Oil, which are expected to contribute a combined 40 million euros, 20 million euros each. The goal is to curb the rapid rise in prices, which are approaching, and in some island areas exceeding, 2 euros per litre.

The new intervention builds on a package of measures the government introduced in March, when turmoil in the Middle East sent shockwaves through international oil markets. Those measures included a cap on gross profit margins in fuel trading and retail, the activation of the Fuel Pass, a state subsidy scheme for petrol-powered vehicle owners, and a diesel subsidy that started at 20 cents per litre before being reduced to 15 cents until it expired.

The fiscal cost of those measures totalled approximately 300 million euros, with around 152 million euros going towards the diesel subsidy and roughly 130 million euros towards the Fuel Pass. Once those measures expired and the price cap was lifted, fuel prices continued to be driven mainly by international developments, prompting the government’s latest move, this time in partnership with the two Greek refineries.

The aim is to limit transport costs for households and businesses at a time when international markets remain highly exposed to geopolitical shocks and disruptions to the flow of crude oil and petroleum products.

Why aren’t pump prices falling accordingly?

International crude prices had begun to ease as the crisis temporarily calmed and shipping traffic through the Strait of Hormuz gradually resumed. The latest escalation between the United States and Iran, however, reversed that stabilising trend, reviving volatility and fears of fresh supply disruptions.

Sources in the refining market note that even before the latest developments, the fall in Brent prices had not been mirrored to the same degree in fuel prices. Strong summer demand, heavy tourist traffic across the Mediterranean, and limited international availability of diesel and jet fuel continue to support refinery product prices.

At the same time, a potential rebound in demand from Asia and the need for major economies to replenish strategic reserves are limiting how far prices can fall further.

Industry sources point out that movements in Brent do not automatically feed through to pump prices, since fuel prices are based on international S&P Global Platts prices for individual refined products, alongside the euro-dollar exchange rate. In the Greek market, the prices at which refineries sell fuel to marketing companies are calculated using the average of Platts prices and exchange rates over the previous four days, a mechanism that smooths out sharp daily swings but can delay how quickly both price rises and falls reach the pump.

New surge in international markets

That fragile balance was on display in international markets on Friday, July 10, as renewed exchanges of fire between the United States and Iran reignited concerns over Middle Eastern supply and once again restricted shipping traffic through the Strait of Hormuz.

Brent crude traded near $76.50 a barrel on Friday morning, while U.S. WTI crude stood at around $72.30. On a weekly basis, Brent was on track for gains of about 6%, and WTI for about 5%, reflecting market jitters over the risk of fresh disruptions to energy flows.

The situation remains highly fluid, with prices simultaneously shaped by regional tensions, efforts to revive negotiations, and expectations that transit through the Strait of Hormuz will eventually return to normal.