Estonian government cancels planned May energy excise hikes
Estonia is scrapping energy excise hikes planned for May to shield households and businesses from rising fuel prices caused by the U.S.–Israeli war with Iran.
Speaking at Thursday's government press conference, Prime Minister Kristen Michal (Reform) said the decision to walk back a hike planned under different circumstances reflects "a time of growing uncertainty and rising prices."
The Ministry of Finance, he added, will now draft the relevant bill for cabinet review next week.
The government also plans to join international efforts to release oil reserves to the market to ease price pressures, Michal said, confirming the Estonian Stockpiling Agency's (EVK) involvement.
The Finance Ministry estimates canceling the hikes could reduce state revenues by €30–40 million, depending on global oil prices, said Kadri Klaos, head of the State Finance Unit at the ministry's Fiscal Policy Department.
"We're still working on the economic forecast, but will review the numbers and impacts once it's complete," Klaos added.
Under earlier plans, excise rates on gasoline and diesel, heating oils, natural gas and electricity would have risen from May 1 this year, with gasoline up 5 percent and diesel 7 percent.
The International Energy Agency (IEA) recommended releasing 400 million barrels of oil this week to help curb global crude price spikes driven by the U.S.–Israeli war with Iran. Oil prices topped $100 per barrel early Thursday morning due to further attacks in the Persian Gulf region.
Budget limits curb broader excise relief
Asked why excise rates couldn't be cut instead of just freezing the planned hikes, Michal said the state budget won't allow for it.
"The budget is still running a 4.5 percent deficit, so we still need to proceed step by step to get it into a better position," he said.
The precise impact of the current Middle East crisis on Estonia's economy and state budget will become clearer with the spring economic forecast due next month.
As an IEA member, Estonia's contribution to the proposed international oil release would be roughly 34,000 metric tons of oil equivalent. Participation is intended to help calm global markets and ease supply disruptions, alongside larger contributions from countries such as the U.S. and Japan.
The government will decide in the coming weeks which fuel reserves to release, in what volumes and over what timeframe. Estonia's stockpiles will be replenished once market conditions stabilize.
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Editor: Huko Aaspõllu, Aili Vahtla
