The Czech government will reinstate price caps on gasoline and diesel from October 1 and tax refiners on 50% of any margin increase over 2025 levels, Reuters reported Monday, as Saudi Arabia’s cut of October crude allocations to Europe compounds pressure from the closed Strait of Hormuz.
According to Czech government statements, the price cap sets maximum gasoline and diesel prices daily, calculated as a three-day rolling average of four benchmarks (Orlen Unipetrol, MOL, ?EPRO and Platts quotations) plus a regulated margin of 2.50 crowns per liter ($0.12). The diesel excise tax drops from 9.95 to 8.011 crowns per liter, the European Union’s floor, through October.
Finance Minister Alena Schillerová put the cost to the state budget at 1.1 billion crowns (roughly $51.9 million) for the month.
The windfall tax still needs parliamentary approval, but would apply to companies processing crude oil with annual revenue above 2 billion crowns, a threshold expected to capture one company in reality: Poland’s Orlen, which operates both Czech refineries. The levy would apply through 2027 and would raise an estimated $260 million a year. Schillerová said it should “help finance the costs that the crisis brought to consumers and public budgets”.
Poland itself taxed Orlen’s domestic refining margins several weeks before the Czech measure was announced.
Refining margins at Orlen and MOL, which supply the Czech market, reached $50 to $55 a barrel in September, up from a historical range of $15 to $20, according to UBS data cited by economist Lukáš Kovanda. The Czech Republic imported only about 7% of its pre-war oil through the Strait of Hormuz. Refined fuel prices set on interconnected European markets rose regardless, because a barrel of diesel from an untouched supply chain sells at the price of the scarcest barrel once refining capacity tightens.
Houthi forces seized the Yemeni port of Mokha and Perim Island in the Bab-el-Mandeb strait in recent weeks, closing off the Red Sea route Saudi Arabia had used to bypass Hormuz after its East-West pipeline was damaged in a September 11 drone attack. Both chokepoints constrained at once left European refiners competing for the same limited crude, pushing margins higher even at facilities not directly short of oil.
Saudi Aramco told European term-contract buyers they would receive no October allocations, redirecting roughly 1 million to 1.5 million barrels a day of Gulf exports to buyers in China, South Korea, India and Japan instead. Poland’s Orlen was already sourcing alternative crude before the announcement.
Czech gasoline hit 44.22 crowns a liter and diesel 47.79 crowns nationally on September 9, the highest gasoline price since August 2022, and the highest diesel price since April 2026. Germany, Spain, Portugal, Italy, Poland and Austria have asked the Irish EU presidency to add a windfall tax on refiners to the September Ecofin meeting agenda in Dublin.
By Charles Kennedy for Oilprice.com
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