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Spain has moved to soften the impact of rising fuel costs with a new set of temporary discounts after confirming that its existing VAT relief on petrol and diesel will come to an end on June 30.

 

Just hours before the previous support package was due to expire, the extraordinary Council of Ministers approved a new decree extending help for motorists, but in a gradually reducing form designed to ease the transition rather than maintain the full level of relief seen in recent months.

 

From July 1, drivers will receive a 15-cent-per-litre discount on petrol and diesel. This will then be reduced to 10 cents in August and 5 cents in September, before the scheme is set to end completely at the end of that month, unless further intervention is deemed necessary.

 

The government introduced earlier fuel support measures on March 22 in response to rising prices linked in part to geopolitical tensions in the Middle East. That package included a reduction in VAT on fuels from 21% to 10%, alongside cuts to the Special Tax on Hydrocarbons.

 

Those measures helped prevent prices reaching record highs during the spring. At one stage, diesel in Spain reached around €2 per litre before easing in the following weeks, although prices have remained above pre-crisis levels.

 

Industry groups have warned that without any continuation of support, motorists would have faced a sharp increase at the pumps. The Spanish Confederation of Service Station Owners (CEEES) estimated that fuel prices could have risen by between 22 and 29 cents per litre once the previous relief expired.

 

Under that scenario, the average cost of petrol and diesel would have moved to just above €1.70 per litre, meaning a 50-litre tank could cost around €11 to €14 more to fill.

 

The new scheme therefore acts as a partial buffer. According to industry calculations, the July discount means petrol prices will rise by around 14 cents rather than 29, while diesel would increase by approximately 7 cents instead of 22 under a full withdrawal of support.

 

Although prices are still expected to rise from Wednesday July 1, the government says the staged reduction is designed to avoid a sudden shock for households and businesses during the peak summer travel period.

 

The plan will then taper further in August and September, with the discount reduced in two steps until it disappears entirely at the end of the scheme.

 

However, the decree includes a safeguard clause allowing the government to reactivate stronger support if international conditions worsen. If tensions in the Middle East escalate again and trigger renewed volatility in oil prices, the subsidy could be restored at a higher level.