Even after the crisis, expensive oil still a challenge for Albania

The closure of the Strait of Hormuz in early 2026 has dealt a new blow to global energy markets. As the corridor through which about a fifth of the world's traded oil passes, any disruption to traffic at this strategic point has immediate consequences for international energy prices. Europe was no exception.

According to European Commission data, between the end of February and the end of May 2026, the average price of Euro-Super 95 petrol in the European Union increased from €1.55 to €1.85 per litre, or 19.3%. Diesel became even more expensive, going from €1.54 to €1.87 per litre, an increase of 21.1%.

However, the impact was not the same in all countries. The largest increases were recorded in countries such as the Czech Republic, Denmark, Belgium and Finland, while Malta remained the only European exception, keeping prices unchanged thanks to a system of state fuel controls.

At first glance, global markets dictate the market, but Albania presents a more complex reality. Unlike most European countries, where price fluctuations are mainly linked to international markets, in Albania over half of the oil price is not determined by the market, but by fiscal policy.

According to a report published by Qëndresa Qytetare, 52.4% of the final price of a liter of diesel in Albania consists of taxes and duties, the highest level in the Balkans. Albania leaves behind not only countries in the region, but also many European economies with significantly higher incomes.

The fiscal structure is what makes Albania a special case. In addition to the excise tax of 39.4 lek per liter, consumers also pay 27 lek in circulation tax and 3 lek in carbon tax. On top of these, there is also a 20% VAT. In total, fixed taxes alone amount to around 0.73 euros per liter, excluding VAT.

The element that distinguishes Albania from neighboring countries is precisely the turnover tax. In most countries in the region, the fiscal burden consists mainly of excise duty and VAT. In Albania, the additional tax of 27 lek per liter significantly increases the final price and limits the impact that price reductions in international markets can have.

The consequences are visible at the pump. At the end of April 2026, oil in Albania was trading at around 214 lek per liter. In the same period, the price was 179 lek in Greece, 160 lek in Montenegro and only 142 lek in North Macedonia. The difference with Skopje was over 72 lek per liter.

According to Global Petrol Prices data, Albania ranked ninth in the world for oil prices and fifth in Europe, behind countries like Finland, the Netherlands, Switzerland and Denmark. The essential difference is that these countries have income levels many times higher than Albania.

The Albanian paradox is that high prices have not led to a decrease in consumption. On the contrary. In the last 25 years, oil imports have increased 2.2 times. During 2025 alone, the country imported about 7,409 thousand tons of fuel, equivalent to about 707 liters for each vehicle.

This dependence on oil is not only economic, but also fiscal. During 2025, the state collected about 73.6 billion lek from fuel taxes, or about 9.8% of all budget revenues. Practically, one in every ten lek that enters the budget comes from oil consumption.

This creates a political dilemma. The more fuel consumption increases, the more state revenues increase. At the same time, any significant reduction in the fiscal burden on oil would have direct consequences for public finances.

Meanwhile, the state itself is a major consumer of fuel. In 2025 alone, public institutions spent around 3.63 billion lek on fuel and oils, becoming both beneficiaries and payers of the current system.

The Hormuz crisis has shown how exposed European economies remain to geopolitical shocks. International energy analysts warn that even in the event of an agreement that would restore normal navigation in the Strait of Hormuz, fuel prices are not expected to quickly return to pre-crisis levels.

Global oil inventories remain low and it will take time for supplies to normalize as refineries process the additional oil that will return to the market. As a result, pressure on prices could continue for months or even years.

But in Albania, the problem does not begin and end with international markets. When more than half of the price of a liter of diesel consists of taxes and duties, the final price reflects not only tensions in the Middle East, but also the fiscal choices made in Tirana.

Amid the debate over high fuel prices, the government is considering changing the formula used by the Transparency Board to set prices. The decision comes after importing companies claimed that the current methodology does not reflect real market costs and threatened to sue the state.

According to operators, the formula does not reflect the increase in operating costs and creates a difference of about 8.7 lek per liter, while the accumulated losses for the sector are estimated at about 7 million euros, which implies a further potential increase in fuel prices in Albania. /acqj.al