What’s behind rising prices at the pump

Logically, the price that drivers pay for a litre of petrol or diesel at the petrol station depends on the price of a barrel of crude oil. But how closely do those two correlate, and what explains the record-high prices at the pump that we see today?

In the early 2000s, the price of Brent crude, the benchmark oil for Europe, was around $20 to $30 per barrel, according to data from the US Energy Information Administration. In June 2008, as the financial crisis was beginning to unfold, the price per barrel shot up to $132, before dropping back down to bounce between $40 and $75 in 2009.

The average price of a litre of diesel in metropolitan France over that same period followed the same curve, according to data from France’s national statistics institute Insee. In January 2008, a litre of diesel cost €1.21, before climbing to €1.46 in June. Prices during the following year hovered between €0.98 and €1.05 per litre.

Fast forward 18 years, and the picture is very different. The price of Brent spiked to nearly $120 in April 2026, soon after the US launched its war on Iran. It dropped back shortly after, and sat around $80 to $90 this summer. But prices at the pump did not follow. In Luxembourg, the maximum price for a litre of diesel, set by the Ministry of the Economy, stood at €1.389 on 1 January 2026. It crossed the €2 mark at the end of March, before climbing to €2.186 in early April, above the €2.112 peak reached in March 2022, at the start of the war in Ukraine. After a lull in June, prices rose again. On 30 September, a litre of diesel still cost €2.057, 48% more than in January. Petrol prices also rose, but to a lesser extent. A litre of Super 95 went from €1.410 to €1.793 over the same period, an increase of 27%. As a result, diesel, which is usually cheaper than petrol in Luxembourg, now costs around 26 cents more per litre. The situation is even tighter in France, where taxes are higher and a litre of diesel cost €2.21 on average in August.

Which leaves one question. Why are prices at the pump so high today, when a barrel of oil costs less than during previous crises?

Stress on production and transport, a major factor

Frédéric Meys, an economist at the Fondation Idea whose work focuses on themes like the energy and low-carbon transition, emphasises that several elements play a role in these high prices. “One of the biggest,” he says, “is the stress that we see on the production side, but also on the transport side.”

Since March 2026, the United States, Iran, and other countries in the Middle East have been exchanging strikes. Iranian attacks have targeted energy infrastructure, including refineries and oil pipelines. On top of that, the blockade of the Strait of Hormuz is having serious consequences on the transport of oil. “Twenty percent of total production of oil in the world goes through the strait, normally,” Meys points out. With the strait closed to traffic, “it’s quite a huge shock.”

And, notes Meys, the time that ships need to travel from the Middle East or other production sites to Europe can have an impact on prices. “When the oil tanker leaves the Middle East, the price is already settled. But it might be settled at a higher price than what we see now on the market. So there can be some delays [in pricing] because of the duration of transportation.”

These production constraints, supply disruptions, and transportation bottlenecks are major factors contributing to the high prices at the pump, and they were not present during the 2008 financial crisis. When prices spike in response to certain events, a supply shock of just a few percent can make a big difference.

A Europe dependent on imports

According to the European Automobile Manufacturers’ Association, 38.4% of passenger cars in Europe are diesel-powered. The US, on the other hand, has very few passenger cars that run on diesel, which is mostly used for trucks.

But Europe, says Meys, does not produce enough diesel for the market. That makes the continent dependent on other players, particularly those in the Middle East. This imbalance largely explains why diesel prices have risen far more than petrol prices. In addition, US president Donald Trump was reported last week to be preparing a 90-day ban on diesel exports, though the move has not yet been confirmed.

High refining margins, especially for diesel

Before arriving at a petrol station, crude oil needs to be refined and processed, and this can also drive up the price at the pump. Another significant element, explains Meys, is that producers’ margins are now far higher than before. Referring to data from France, “if we look at only the margins of the refineries, we see a huge boom in margins between February of this year and September. It’s more than 173%.”

Data published by the LSEG (London Stock Exchange Group), the European Commission, and the European Central Bank illustrate this sharp increase in refining margins. In the last week of February, the average retail price for a litre of diesel in the eurozone stood at €1.63, of which refining accounted for €0.13. In the third week of July, a litre of diesel cost €1.98, with refining alone contributing €0.38, a 168% increase, according to a blog post published by the ECB.

Taxes and exchange rates

The taxation of diesel also plays a role, says Meys. One element, excise tax, remains stable. In Luxembourg, it stands at a fixed national rate of €0.422 per litre. Excise tax is higher in neighbouring countries. In France, for instance, it has been fixed at €0.6075 since 1 March. The other element is VAT, or value added tax, which is “levied as a fixed percentage of pre-tax consumer price and excise duties,” according to the ECB. The exact rate of VAT varies across countries, but is usually around 20%. That has an impact on the price as well, notes the Fondation Idea economist.

Finally, because most oil contracts and prices are quoted in US dollars, the euro-dollar exchange rate can also affect prices at the pump. At the end of February 2026, €1 was the equivalent of $1.18. By September, the US dollar had strengthened, with €1 the equivalent of $1.135. That’s roughly a 4% difference, notes Meys. Though not very impactful for the moment, fluctuations in the exchange rate could have a greater effect in the future.