Green diesel hits €1.63/L as Hormuz risk keeps prices high

Green diesel reached €1.63/L this week, the highest price recorded in October and a figure that now sits more than 60c/L above where it stood a year ago. The average for the month came in at €1.58/L including VAT, according to a survey of farmers and contractors across the country by Agriland.

The October average masks a volatile month. Prices showed signs of falling at the start of October, then climbed again as the weeks progressed. For contractors, the direction of travel matters more than the monthly average, because most quote work rates on the assumption of a stable fuel bill.

Why the price is stubborn

The root cause lies 6,000km away. Fuel prices began to rise sharply after the US and Israel entered into conflict with Iran, the country that controls the Strait of Hormuz, the choke point for oil leaving the Gulf region. In February 2026, Iran blocked access to the strait entirely. Oil could not get out, fears of a supply shortage took hold, and prices rose immediately.

The strait has since reopened and allows some access. But vessel traffic still carries risk, and where there is risk there is cost. That risk premium is the mechanism keeping green diesel (marked gas oil, the rebated fuel used in farm machinery) at levels contractors describe as the possible new normal.

Does the government rebate cover the gap?

The state's Fuel Income Support Scheme (FISS) pays a 20c/L rebate, and contractors acknowledge it as welcome relief. But the arithmetic is stark: fuel is now over 60c/L more expensive than last year, so the rebate covers roughly a third of the increase for contractors who do not add a diesel surcharge to their prices.

Adding a surcharge brings its own problems. Because fuel prices fluctuate day to day, contractors reported spending more 'out-of-cab' time keeping their rates current. One contractor said he had added extra diesel storage at considerable cost to avoid constantly changing rates, but maintains it has been a worthwhile investment.

The surcharge also creates friction with customers. Some contractors who levy one are being met with pushback from farmers asking why they are charged more when the contractor is already receiving the FISS payment.

Who is to blame?

As the year has progressed, blame has shifted from suspect to suspect among farmers and contractors. The current focus is on diesel suppliers, and specifically on what contractors see as a lack of competition for bulk diesel deliveries in rural areas. The continued acquisition of smaller suppliers by big brand names is a particular cause for concern, because fewer players in a local market means less pressure on price.

Exactly who bears responsibility remains up for debate in contracting circles. What contractors do broadly agree on is that high fuel prices may simply be the new normal, and that planning should assume they persist.

The context adds to the pressure. The majority of winter crops are now in the ground, and the contracting calendar is entering its traditionally slower period, so there is less work volume over which to spread a higher fuel bill. Farmers should watch bulk delivery quotes from competing suppliers before committing to winter fills, and monitor whether the FISS rate is revisited as prices hold above €1.60/L.