The Latvian Competition Authority (KP) has proactively responded to the rapid increase in fuel prices observed in the second quarter of 2026, influenced by geopolitical situations in the Middle East. The authority conducted a detailed analysis of the fuel and LPG markets, evaluating price dynamics, procurement costs, and the impact of temporary excise tax reductions.

KP's analysis indicates that the price increase for 95-octane gasoline and diesel was primarily driven by a sharp rise in procurement prices in international markets. The data suggests that the increase was not significantly due to a rise in retailer markups, which actually decreased during the period.

For 95-octane gasoline, the retailer markup fell from an average of 0.111 EUR/l in January to 0.070 EUR/l in May, indicating that retailers absorbed part of the procurement price increase. In June, as procurement prices decreased, retail prices also fell, with markups returning to January levels.

Regarding diesel prices, KP found that the retailer markup remained relatively stable, fluctuating between 0.066 EUR/l and 0.089 EUR/l. Retailers also absorbed part of the procurement price increase, with markups decreasing when procurement prices rose.

KP also evaluated the impact of the excise tax reduction on diesel fuel, which was implemented on April 1, 2026. The analysis showed that the average price of diesel fuel was approximately 4.95 cents per liter lower due to the tax reduction, reflecting a transfer of about 58% of the tax cut to consumer prices.

Furthermore, KP noted that the transfer of the excise tax reduction was not uniform over time, with the most significant price drop occurring in the first week after the tax cut. The analysis also compared fuel prices in Latvia with those in other Baltic states, finding that Latvia's fuel price dynamics were generally in line with regional trends.

KP will continue monitoring the fuel and LPG markets until the end of 2026, with plans to publish a final report in February 2027.