New fuel price spike; Dutch Cabinet might adjust drivers’ taxes to compensate
Oil prices again rose to over $100 per barrel on Monday after peace talks between the United States and Iran failed over the weekend, jeopardizing the fragile 2-week ceasefire implemented last week. Fuel prices are expected to spike again. The Dutch government is considering tax breaks for motorists to compensate.
After the peace talks failed, U.S. president Donald Trump announced that the U.S. Navy would block the Strait of Hormuz, an important shipping route for oil from the Middle East, ANP reported.
In response, the price of Brent crude, the benchmark for oil from the Middle East, rose by over 7 percent to $102 per barrel, according to the news wire. American oil became 8.5 percent more expensive at nearly $105. Jorge Montepeque of the oil manager Onyx Capital Group expects oil prices to skyrocket to $150 per barrel if Trump goes through with his blockade, warning that the move would turn a regional conflict into a global one.
The Strait of Hormuz is also an important shipping route for liquefied natural gas (LNG). At the gas exchange in Amsterdam, the gas price rose by 9 percent to €47.60 per megawatt-hour. Before the Iran war broke out, gas prices fluctuated around €32 per megawatt-hour.
The rising fuel and gas prices are putting increasing pressure on the Dutch Cabinet to intervene to protect people’s purchasing power. According to the Telegraaf, the Jetten I Cabinet is considering a higher tax-free mileage allowance and a reduction in motor vehicle tax to compensate road users for the higher fuel prices.
The Cabinet does not want to lower excise duties on fuel, as the previous government did after Russia invaded Ukraine in 2022, which sent fuel prices skyrocketing. Lowering the motor vehicle tax could quickly provide some relief to motorists and work out cheaper for the treasury than an excise duty cut.
The government is also looking into measures to help people with higher energy bills, should this energy crisis become a long-term issue. But the Cabinet does not yet deem such measures necessary.
