- Subsidies and tax cuts used to ease pressure on households and businesses.
- Export curbs and reserves deployed to stabilise domestic fuel supply.
- Rationing and demand controls introduced in supply-constrained economies.
Oil prices staying above $100 a barrel for several weeks have pushed governments into active intervention, forcing a shift from market observation to policy action. The response is no longer uniform. While some countries are absorbing the impact through subsidies and tax cuts, others are tightening control over supply or moving towards rationing and demand restrictions.
What is emerging is not a single global strategy, but a layered response shaped by economic capacity and energy dependence. From export curbs and price caps to free public transport and reduced working weeks, the measures being rolled out reflect how far each country is willing — or able — to go in managing the strain of persistently high fuel costs.
United Kingdom
The UK has taken a restrained approach, choosing targeted support over broad fuel price intervention despite sustained increases in petrol costs. Pump prices have climbed to an 18-month high, hovering around £1.62 to £1.70 per litre, reflecting global crude trends rather than domestic supply disruption, as flagged by the RAC.
Instead of cutting fuel duty or introducing subsidies at the pump, the government announced a £53 million package in March aimed at households dependent on heating oil, particularly in rural and off-grid areas. This keeps support tightly focused rather than spreading fiscal costs across all consumers.
At the same time, attention has shifted towards pricing behaviour in the retail market. Officials have indicated that intervention remains an option if fuel retailers are found to be maintaining margins that do not reflect movements in wholesale prices. The Competition and Markets Authority continues to monitor the sector, especially after earlier findings pointed to weakened competition among major retailers.
France
France has leaned more heavily on direct fiscal transfers to shield households from rising fuel costs. Millions of lower-income households have received €150 payments, with the measure targeting those most exposed to transport and energy price increases.
Support has also been extended to sectors where fuel costs directly impact production and supply chains. Agriculture and transport operators have received additional funding exceeding €70 million, helping offset the immediate cost burden without distorting broader market pricing.
Unlike some of its European counterparts, France has avoided sweeping fuel tax cuts. Policymakers have been cautious about reducing duties across the board, arguing that such measures would be costly and risk fuelling inflation further. Instead, the approach has been to deliver targeted relief while allowing fuel prices to remain linked to global markets.
Italy
Italy has taken a more direct route by reducing fuel taxes to bring down pump prices. The government approved €417 million in excise duty cuts, lowering the tax component embedded in petrol and diesel prices, as reported by Reuters.
The measure provides immediate relief to consumers, with fuel taxation accounting for a significant share of retail prices across Europe. By adjusting duties, Italy has been able to reduce the visible impact of rising crude without intervening in supply chains or imposing price caps.
Officials have framed the tax cuts as a temporary measure linked to oil price trends, allowing flexibility if global prices remain elevated or begin to ease. This approach helps limit long-term fiscal exposure while responding to short-term price pressures.
Italy has not introduced fuel rationing or direct price controls during the current phase. Instead, the response remains firmly within a fiscal framework, relying on tax policy to manage consumer impact while preserving market-based pricing mechanisms.
United States
The US has played a central role in shaping the global response to rising oil prices, moving beyond domestic measures to influence supply at an international level. Washington has been a key driver behind the International Energy Agency’s coordinated release of 400 million barrels from strategic reserves, the largest such intervention on record.
Within that, the US alone is contributing around 172 million barrels from its Strategic Petroleum Reserve, accounting for a significant share of the total release. This positions the country not just as a participant, but as the lead supplier in the effort to stabilise global markets.
The objective has been to offset supply disruptions linked to tensions around the Strait of Hormuz, a route that typically carries about one-fifth of global oil flows. The coordinated release is intended to inject additional supply into the market over several months, buying time for geopolitical conditions to stabilise.
Despite this, retail fuel prices remain elevated, with petrol exceeding $4 per gallon (around £0.84 per litre) in parts of the country. The limited immediate impact highlights the scale of the supply shock and the constraints of reserve-based interventions.
Alongside reserve releases, the US has also pressed domestic producers to increase output, particularly shale operators, reinforcing its broader strategy of stabilising supply rather than directly controlling prices.
China
China has relied on a combination of strategic reserves and administrative controls to manage the impact of rising oil prices. The country, the world’s largest importer of crude, holds an estimated 900 million barrels of oil across strategic and commercial reserves, providing a buffer equivalent to roughly three months of import demand, based on International Energy Agency estimates and industry data.
Beijing has steadily built these reserves over time by increasing purchases during periods of lower crude prices and ample global supply, particularly from Gulf producers, as highlighted in Reuters and Bloomberg analyses. This long-term stockpiling strategy has allowed China to better absorb external supply shocks.
Alongside this, authorities have moved to retain more fuel within domestic markets. Refiners have been directed to reduce fuel exports through tighter quota controls, ensuring that supply remains available locally during periods of price volatility.
Fuel pricing operates under a regulated system, where adjustments are linked to global crude benchmarks but remain within defined limits. This helps prevent sharp spikes in retail prices, allowing China to stabilise domestic markets without relying heavily on large-scale consumer subsidies.
India
India’s response reflects its heavy dependence on imported crude, combining tax adjustments with supply-side controls. Excise duties on petrol and diesel have been reduced by ₹10 per litre (about £0.09), easing immediate pressure on consumers.
At the same time, export duties have been imposed to keep fuel within the country. Diesel exports face a levy of ₹21.5 per litre (£0.19), while aviation turbine fuel is taxed at ₹29.5 per litre (£0.26). These measures are designed to prioritise domestic supply during a period of global tightness.
There has also been a shift in internal allocation. LPG supplies have been redirected away from industrial use towards households, ensuring essential consumption is protected.
State-owned oil companies continue to play a stabilising role, often delaying full pass-through of global price increases to retail consumers. This creates a buffer, though it also places pressure on company margins.
India’s approach combines fiscal relief with supply management, aiming to balance inflation control with energy security.
Indonesia
Indonesia has adopted one of the most fiscally intensive responses, expanding fuel subsidies to maintain stable domestic prices. The government has allocated 381.3 trillion rupiah (about £17.8 billion / $22.5 billion) towards fuel and electricity subsidies.
This allocation is significantly higher than initial budget assumptions, which were based on oil prices around $70 per barrel. With crude now well above that level, the subsidy burden has increased sharply, raising concerns over fiscal sustainability.
Fuel prices for consumers are effectively capped, with the government absorbing the difference between international costs and domestic retail rates. This helps shield households and businesses from immediate price shocks, particularly in transport and food supply chains.
However, the approach comes with trade-offs. Higher subsidy spending is expected to widen the fiscal deficit, while limiting incentives to reduce fuel consumption.
Indonesia’s strategy prioritises price stability and social protection, even as it increases pressure on public finances.
Philippines
The Philippines has moved into crisis-response mode as fuel supply pressures intensify. Authorities have declared a national energy emergency, with reserves estimated to cover only around 45 days of demand.
Financial support has been extended to transport operators, helping offset rising fuel costs in a sector critical to daily commuting and logistics. At the same time, the government has introduced measures aimed at reducing overall energy consumption.
Public sector operations have shifted to a four-day work week, with additional steps taken to limit electricity and fuel use in government offices. These measures are designed to cut demand rather than stabilise prices directly.
Funding support is being drawn in part from the Malampaya energy fund, providing a temporary buffer for emergency spending.
Bangladesh
Bangladesh has introduced direct controls on fuel distribution as supply pressures build. Rationing measures have been implemented, limiting access to fuel and prioritising essential sectors.
Authorities have also stepped up enforcement against hoarding. Monitoring systems have been introduced, with penalties for stockpiling or diversion of fuel supplies outside regulated channels.
The government has tightened control over distribution networks, ensuring that available fuel is directed towards priority uses such as transport and essential services.
The response is focused on managing scarcity rather than reducing prices, with rationing and enforcement forming the core of the strategy.
Sri Lanka
Sri Lanka has focused on reducing fuel demand through administrative controls as supply pressures intensify. Authorities have declared every Wednesday a holiday for public institutions, extending a four-day working week to cut transport usage and conserve fuel. The measure also applies to schools and universities, while essential services such as healthcare and immigration remain operational.
President Anura Kumara Dissanayake told officials the country must “prepare for the worst, but hope for the best” during an emergency meeting, underscoring concerns over potential shortages linked to disruptions in the Strait of Hormuz.
Sri Lanka remains heavily dependent on imported fuel, with Asia accounting for nearly 90 per cent of oil and gas flows through the strait. To manage limited supply, authorities have also reinstated the National Fuel Pass system, first introduced during the 2022 economic crisis. The scheme rations fuel purchases, with quotas set at around 15 litres for private cars and five litres for motorcycles, though the limits have drawn public criticism.
Australia
Australia has combined tax relief with measures aimed at reducing fuel demand. Fuel excise has been cut by 26 cents per litre (about £0.13), lowering pump prices directly.
At the same time, several states have introduced free public transport initiatives. Victoria and Tasmania, in particular, have rolled out temporary schemes covering buses, trains and ferries, encouraging commuters to shift away from private vehicles.
These measures are designed to reduce petrol consumption while also easing household transport costs.
Australia’s response blends fiscal and behavioural tools, aiming to manage both price impact and demand levels.
Thailand
Thailand has implemented both price controls and supply restrictions. Diesel prices have been capped at around 33 baht per litre (approximately £0.72), preventing further increases at the pump.
To support this, the government has drawn on subsidy funds to bridge the gap between global oil prices and domestic retail rates.
Fuel exports have also been restricted, ensuring that more supply remains within the country. Additional conservation measures, including reduced operating hours and energy-saving guidelines, have been proposed.
Thailand’s response combines price caps with supply management, aiming to stabilise domestic markets while limiting exposure to global volatility.
Spain
Spain has introduced one of the most comprehensive fiscal responses. A €5 billion package (around £4.3 billion) includes fuel subsidies of approximately €0.30 per litre, directly reducing pump prices.
The government has also cut VAT on fuel to 10 per cent, alongside targeted support for transport, agriculture and fisheries.
These measures are designed to cushion both households and businesses from rising fuel costs, particularly in sectors heavily dependent on energy inputs.
Spain’s response reflects broad fiscal intervention, combining subsidies, tax cuts and sector-specific support.
Norway
Norway has reduced fuel taxes to moderate the impact of rising oil prices. Petrol duties have been cut by 4.41 kroner per litre (about £0.32), while diesel taxes have been reduced by 2.85 kroner (about £0.21).
These reductions directly lower retail fuel prices, providing immediate relief to consumers.
The policy reflects Norway’s ability to absorb fiscal costs, supported by its status as a major oil producer.
Slovakia
Slovakia has introduced stricter controls, including fuel price caps and limits on purchases. These measures are designed to prevent price spikes and manage supply distribution.
Rationing mechanisms restrict the volume of fuel that can be purchased, while pricing regulations limit how much retailers can charge.
The response reflects a move towards direct market intervention in both pricing and access.
South Korea
South Korea has rolled out a $17.3 billion (£13.7 billion) supplementary budget to address rising energy costs.
The package includes 5 trillion won (around £3 billion) in support for refiners operating under price caps, ensuring supply stability. Consumers are also receiving vouchers ranging from 100,000 to 600,000 won (£60 to £360).
Fuel price caps remain in place, limiting increases at the pump.
South Korea’s response combines fiscal expansion with price controls.
South Africa
South Africa has relied on limited fiscal adjustments rather than large-scale subsidies to manage rising fuel costs. The country operates a regulated fuel pricing system, where prices are revised monthly based on global oil benchmarks and movements in the rand.
To soften the impact of sustained high crude prices, the government introduced temporary reductions in fuel levies, lowering the tax component embedded in retail prices. This has helped moderate increases at the pump, though it does not fully offset global price pressures.
Petrol and diesel prices continue to reflect international trends, with partial pass-through to consumers. The levy reduction acts as a buffer rather than a full subsidy, allowing the government to contain fiscal exposure while still offering some relief.
Unlike countries that have imposed price caps or expanded subsidies significantly, South Africa has not intervened in supply flows or introduced rationing measures. The response remains within the existing pricing framework, using tax adjustments to manage volatility.
Across these responses, a clear divide is emerging in how governments are handling sustained high oil prices. Wealthier economies are leaning on subsidies, tax cuts and strategic reserves to cushion consumers, while others are moving towards direct controls on supply, pricing and consumption.
With crude prices still elevated and supply risks unresolved, the policy response is likely to deepen. Governments that began with limited relief measures may be forced to expand intervention, while those already rationing fuel could tighten controls further if disruptions persist.
