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Oil giants rush in to help Italy's Meloni reduce energy costs by introducing fuel price caps

Kuwait's energy firm,?Q8, will cap the price of Italian petrol at the pump for a month beginning October 1. This follows similar commitments by Italy's Eni as well as?Azerbaijan SOCAR.

Market analysts have interpreted the moves as an attempt to curry favor with Rome's government and discourage it from imposing windfall taxes on energy company profits. This was something that Economy Minister Giancarlo Giorgetti, and other prominent politicians had proposed.

Giorgia Melons is scrambling for resources to help families, firms and businesses cope with the rising energy costs. She's preparing to present her government's budget 2027 in October. It will be her last presentation before an upcoming election next year.

Q8. Italy said in a press release that its cap would generate "tangible" benefits for motorists but didn't specify the price.

Meloni, in a press release, said: "I'd like to thank Kuwait as well as the group operating the Q8 stations that operate in Italy for listening to the Italian government's request to energy companies about capping fuel prices."

SOCAR and Eni have capped diesel prices at EUR2.19 ($2.48) a litre since Monday, while petrol is priced at EUR1.99 per litre.

Equita and Intermonte, two brokers who provide brokerage services to energy companies and their clients, wrote in client reports that this initiative would reduce the risk of new taxation on windfall profits.

Germany, Spain Portugal, Italy and Poland are calling for a windfall tax to be imposed on energy companies across the EU. They warn that oil prices are rising at a rapid rate, fueling voter unrest over the cost of living.

Giorgetti is not ruling out the introduction of a domestic windfall-tax rather than waiting on a joint initiative.

The National?Consumers' Union of Italy welcomed Q8's decision, stating that about half of Italy’s network of fuel stations will now be imposing price caps.

The consumer group stated that the challenge is to "prevent the abuse" of dominant market positions, and to ensure that independent fuel stations are not squeezed out or forced to shut down.

According to data from the industry ministry, price caps have had little impact on lowering fuel prices.

The self-service price for petrol was EUR2.126 per 1 litre, down from EUR2.159 the previous day. Diesel prices were also slightly lower, at EUR2.335, compared to EUR2.377.

The price of petrol on the motorway network was EUR2.180 and diesel EUR2.383.

(source: Reuters)