The year 2025 in the fuel market has been marked by changing events and new challenges. On a global level, both geopolitical events and economic forecasts continue to dictate the trends in fuel prices, while in the Baltics and Latvia the tax policy, economic standstill and increasing competition among traders have significant influence. At the same time, discussion on alternative fuels and legal guidelines, which will define the future of the sector in the coming years, is becoming more relevant.
The world
In 2025, oil prices have fluctuated from USD 58 to 82 per barrel. The highest point was achieved at the beginning of the year, with assurance of a strong economic growth existing in markets. The lowest oil price level was at the end of April, when the new US administration announced introduction of the tariff policy which caused a drop in prices and cast doubt about the growth perspectives of the global economy.
Overall, oil prices increase when geopolitical conflicts escalate and concerns arise about potential oil supply disruptions, but decrease in times when there are signs of negative trends of economic development and, accordingly, oil consumption.
The Baltic region
The year 2025 is the first period over a longer period of time when the excise rate set for diesel fuel in Latvia is lower than in Lithuania. As a result, Latvia has become more competitive in terms of oil prices, which has led to the change of behaviour of international carriers. A part of carriers refill more fuel in Latvia, Estonia and Poland, and less – in Lithuania. This increases Latvia’s revenue from the excise tax, which is a positive factor for the state budget.
Latvia
The Latvian economy still displays signs of a standstill in 2025. In Q1, GDP grew by only 0.7%, while inflation over the half of the year reached 3.6% exceeding the EU average. The rise in fuel consumption is limited – the amount sold in retail sales increased by 0.8%, while in wholesale it decreased by more than 10%. The drop in the wholesale segment was substantially affected by a smaller fuel consumption in agriculture due to adverse weather conditions.
In the circumstances of a stagnant consumption intense competition over the market shares is observed. Traders use price and marketing activities which provide more favourable conditions to consumers yet decrease the profitability of the companies in the sector and facilitate further consolidation of the market.
Alternative fuels
In June 2025, there were more than 13 thousand registered electric vehicles in Latvia, which accounts for slightly more than 1% of the total car fleet in the country. Although the increase is substantial, the growth potential is still high. The availability of the charging infrastructure in the country develops quickly, and the charging point to the number of vehicles ratio is one of the highest in the European Union.
In the cargo transport segment, the prevalence of electric vehicles is currently limited due to high costs and technical requirements. In this segment, compressed natural gas is used increasingly, which in the future may be substituted by biomethane – the most sustainable of the available alternative solutions for cargo transport.
Legislation
In Latvia, the Transport Energy Law, which provides for a reduction of the amount of harmful emissions by 16% by 2030, is in the process of adoption. The aim of the Law is to increase the use of renewables in transport while providing assurance to businesses of the need to develop the infrastructure of alternative fuels.
It is important that every trader has the right to choose the most suitable solutions to ensure compliance with the requirements of the Law – electric charging, compressed natural gas, biomethane, or other fuels. This would facilitate competition and more favourable conditions for the final users.
As from 2027, the transport sector is to be included in the Emissions Trading System (ETS2), which will increase the costs of fossil fuel while reducing the price difference between fossil and renewable fuels. The introduction of the Transport Energy Law would allow Latvia to fulfil the requirements of the European Union directive in due time and avoid additional penalties.
About Virši:
Virši is a rapidly growing local energy commodities trader and convenience store network with 30 years of experience. Currently, Virši operates 83 service stations and has more than 900 employees throughout Latvia. Since 11 November 2021, the shares of AS VIRŠI-A have been listed on the Nasdaq Riga First North Alternative Market.
More information:
AS VIRŠI-A Undīne Priekule,
Communications Manager
E-mail: undine.priekule@virsi.lv
Telephone: +371 26141219
