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Just a couple of weeks ago, Polish Prime Minister Donald Tusk called his country an oasis of stability and promised that 2026 would be a year of turbocharged acceleration for the Polish economy. The wait wasn't long. Already in March, Poles could observe a turbocharged acceleration, though not in economic indicators, but in the prices at gas stations. As soon as the Middle East flared up, all that stability evaporated instantly. As they say, a chain is only as strong as its weakest link. Poland’s weakest link? Its leadership, whose lack of strategic, pragmatic thinking has left the country exposed.
The war between Israel and the United States and Iran has led to a decrease in hydrocarbon production in the Persian Gulf countries, which found themselves in the crossfire, and also caused disruptions in shipments through the Strait of Hormuz, the world's largest oil and gas artery. The result is a rapid increase in energy prices, unseen since the energy crisis of 2022.
In recent days, oil prices have either surged sharply or retreated slightly, depending on statements from Washington, Tehran, and the International Energy Agency. One thing is clear today: as long as the guns don’t fall silent in the Middle East, the situation will remain extremely volatile. This means that countries importing energy resources will have to find mechanisms to stabilize fuel prices on their domestic markets. But does everyone have such mechanisms?
The war between Israel and the United States and Iran has led to a decrease in hydrocarbon production in the Persian Gulf countries, which found themselves in the crossfire, and also caused disruptions in shipments through the Strait of Hormuz, the world's largest oil and gas artery. The result is a rapid increase in energy prices, unseen since the energy crisis of 2022.
In recent days, oil prices have either surged sharply or retreated slightly, depending on statements from Washington, Tehran, and the International Energy Agency. One thing is clear today: as long as the guns don’t fall silent in the Middle East, the situation will remain extremely volatile. This means that countries importing energy resources will have to find mechanisms to stabilize fuel prices on their domestic markets. But does everyone have such mechanisms?
In Poland, prices at gas stations shot up following the rise in oil prices on global stock exchanges.
On 27 February, just before the strikes on Iran, a liter of diesel fuel in Poland cost 4.78 zloty, and by 10 March the price had already reached 6.36 zloty per liter. That means it rose by a third in less than two weeks.
To slow down the price increase, the Polish oil refining company Orlen announced on 9 March that it would reduce its margin on diesel fuel to nearly zero. However, this measure is temporary and cannot completely offset the price increases at gas stations. Experts predict that if the conflict in the Middle East drags on, the price of diesel fuel could reach 10 zloty per liter.
Meanwhile, economists warn that rising oil and gas prices are affecting Polish industry and the agricultural sector. The consequences will become visible within a few months.
“The price increase at gas stations was felt almost immediately, but the impact on gas and electricity tariffs will become evident within 1-3 months, depending on the regulatory mechanism and contracts,” writes Polish economist Piotr Arak in his article for Money.pl. “Secondary effects, such as rising food production costs, transportation expenses, and the cost of services, usually appear within 3-6 months. Particularly vulnerable are energy-intensive sectors: the chemical industry, metallurgy, the ceramics industry, and the agri-food sector, where rising gas prices lead to higher fertilizer costs, as well as the construction industry.”
It is worth noting that Grupa Azoty, the largest chemical company in Poland, has already announced a temporary suspension of new orders for some nitrogen fertilizers, and subsequently reported an increase in prices for its products. This situation is causing serious concern among Polish farmers ahead of the spring fieldwork season.
To slow down the price increase, the Polish oil refining company Orlen announced on 9 March that it would reduce its margin on diesel fuel to nearly zero. However, this measure is temporary and cannot completely offset the price increases at gas stations. Experts predict that if the conflict in the Middle East drags on, the price of diesel fuel could reach 10 zloty per liter.
Meanwhile, economists warn that rising oil and gas prices are affecting Polish industry and the agricultural sector. The consequences will become visible within a few months.
“The price increase at gas stations was felt almost immediately, but the impact on gas and electricity tariffs will become evident within 1-3 months, depending on the regulatory mechanism and contracts,” writes Polish economist Piotr Arak in his article for Money.pl. “Secondary effects, such as rising food production costs, transportation expenses, and the cost of services, usually appear within 3-6 months. Particularly vulnerable are energy-intensive sectors: the chemical industry, metallurgy, the ceramics industry, and the agri-food sector, where rising gas prices lead to higher fertilizer costs, as well as the construction industry.”
It is worth noting that Grupa Azoty, the largest chemical company in Poland, has already announced a temporary suspension of new orders for some nitrogen fertilizers, and subsequently reported an increase in prices for its products. This situation is causing serious concern among Polish farmers ahead of the spring fieldwork season.
“In the near future we can expect fertilizer prices to rise and possibly even face problems with their availability on the market. This is a direct consequence of the conflict in the Middle East and disruptions in the gas market. Over just the last few days, gas prices have increased by 75%. We are also seeing reactions from domestic fertilizer producers who have temporarily suspended accepting new orders for nitrogen fertilizers,” said Mateusz Stankiewicz, an expert at the Federation of Sectoral Agricultural Producers’ Associations, in a statement to the Newseria news agency.
According to him, the current situation may undermine the financial stability of many farms and push them to the brink of bankruptcy.
Meanwhile, experts are revising their forecasts for Poland’s economic growth. If the situation on the oil and gas market does not improve, Poland will face rising inflation and slower GDP growth. At the same time, due to the country’s large public debt and budget deficit, Warsaw has limited tools to stabilize the situation.
“Poland has one of the highest deficits in the EU and relatively few options for economic intervention under current conditions,” Piotr Arak noted.
A similar view is shared by Krzysztof Kolany, chief analyst at the Polish outlet Bankier, who believes the situation today is even more difficult than in 2022. “Around 20% of global crude oil and liquefied natural gas supplies are not reaching the market due to the effective blockade of the Strait of Hormuz by Iranian forces.”
Moreover, the Israeli-U.S. attack against Iran appears to be only gaining momentum, which means prolonged disruptions in the supply of crude oil from the Persian Gulf. Neither the market nor the oil infrastructure is ready for this,” he believes.
At the same time, the analyst points out that the issue now is not just disruptions to shipments via the Strait of Hormuz, but a reduction in production. And this reduction cannot be compensated by any temporary mechanisms, including the release of strategic oil reserves by the G7 countries. “More and more Gulf countries are being forced to cut production due to overflowing storage facilities and the impossibility of delivering goods to consumers. In Iraq, oil production has already fallen by 70%. This means that the entire system will be paralyzed. Its restart will be neither quick nor easy,” the expert believes.
In light of the current situation, the Polish opposition proposes to reduce VAT and the excise duty on fuel, which would lower the current price at gas stations by approximately 1 zloty per liter. Such measures were already taken during the energy crisis in 2022. However, the Polish government currently rejects this idea. According to Krzysztof Kolany, this is due to the poor condition of Poland’s state finances, characterized by record public debt and a huge budget deficit.
“Repeating the 2022 tax maneuver is impossible because of the dire state of state finances. With a planned budget deficit of 6.5% of GDP and a public debt exceeding the constitutional limit of 60% of GDP, the government has practically no opportunity to reduce taxes on fuel, unless it decides to cut other items of the state budget... Even forcing Orlen Company to reduce profits will not change much in the situation with high prices for crude oil and ready-made fuel on world markets,” the analyst believes.
In his opinion, if retail fuel prices reach 10 zloty per liter, billboards will have to display prices for half a liter of diesel fuel.
“Our only hope remains... the U.S. election calendar. In early November Americans will elect members of the House of Representatives and a third of the Senate in the so-called midterm elections. And few things annoy American voters as much as expensive fuel. President Trump and the Republican majority understand this perfectly well, this is why they can hardly afford a long and costly war with Iran,” concludes Bankier’s chief analyst.
It is easier to see big things from afar. Back in the day Poland was one of the first countries to ditch Russian energy resources, and the Polish pro-government mass media called their country a symbol of the European Union’s energy independence. On top of that, Warsaw pushed hard for the introduction of duties on Russian and Belarusian fertilizers. Apparently, this was also for the sake of independence. The price of this independence is now displayed on electronic billboards at gas stations, and tomorrow Poles will see it on price tags in stores. The only hope for both the people of Poland and the country’s leadership is the U.S. election calendar. How do you like this stability and independence?
By BelTA’s Vita Khanatayeva
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