Brent crude oil prices have surged over 42% since the onset of the Middle East conflict, with an 11% increase recorded in the past week alone, reaching $103.14.

Conflict between Israel and Iran is impacting Portuguese households through rising energy and food costs. A 50-liter tank of fuel is now 11.75 euros more expensive than before the war, with further risks if the Strait of Hormuz (Estreito de Ormuz) closes. The International Energy Agency warns of a massive global supply drop this month. Residents should note that these pressures may also lead to interest rate hikes.

Minister of National Defence Nuno Melo defended a 5.8 billion euro investment in the armed forces through the Instrument of Action for European Security (Instrumento de Acção para a Segurança da Europa or SAFE). The government claims the loans are a “unique opportunity” to modernize equipment and cover full life cycles of military assets. Portugal has now reached the NATO target of 2% of GDP in military spending. Taxpayers should note that the government has refuted accusations of a lack of transparency regarding these loans.

The European Investment Bank (EIB) Group increased its lending to Portugal by 43% in 2025, reaching three billion euros. EIB President Nadia Calviño and Finance Minister (Ministro das Finanças) Joaquim Miranda Sarmento announced that 1.5 billion euros is specifically earmarked for social and affordable housing. Other major investments include nearly one billion euros for the high-speed rail project between Porto and Lisbon. Those seeking affordable housing should note that these funds aim to increase supply across the country quickly.

Portugal held 1.56 million tonnes of petroleum reserves in the final quarter of last year, with the government announcing plans to release 10% of these strategic stocks to help stabilize fuel prices amid global supply concerns.

European Central Bank (Banco Central Europeu or BCE) President Christine Lagarde has promised to do “whatever is necessary” to keep inflation under control. Lagarde noted that while the current situation differs from the 2022 energy crisis, the conflict in the Middle East poses risks to price stability. Taxpayers should be aware that the bank remains vigilant against sudden spikes in energy costs that could impact the cost of living.

Minister of Environment and Energy Maria da Graça Carvalho stated that fuel prices (preços dos combustíveis) could decrease next week if international Brent crude prices remain low through Friday. The government is monitoring the impact of the Middle East conflict on energy costs and is prepared to offer tax relief via the tax on petroleum products (Imposto sobre os Produtos Petrolíferos or ISP). Drivers should note that a discount applies if prices rise by more than 10 cents.

Update: Portugal to release 10% of strategic oil reserves

Prime Minister Luís Montenegro announced that Portugal will release two million barrels of oil—roughly 10% of its strategic reserves—to help stabilize fuel prices. This move follows an International Energy Agency agreement to release 400 million barrels globally due to supply risks in the Strait of Hormuz.

A new report from the Migration Observatory (Observatório das Migrações) reveals that immigrants contributed over €4.15 billion to the Social Security (Segurança Social) system in 2025. This figure represents 14% of the total revenue, highlighting the significant economic role of foreign residents in the national welfare system. Residents should note that this contribution comes despite immigrants making up a smaller percentage of the overall population.

The President of the Eurogroup, Kyriakos Pierrakakis, warned that the eurozone must prepare for a prolonged period of economic instability due to the conflict in the Middle East. He noted that while the European economy is resilient, potential disruptions to maritime transport and energy supplies could threaten the 2% inflation target. Residents should be aware that these external shocks may lead to sustained pressure on energy prices and supply chains in the coming months.

The warning was issued by the president of the Eurogroup, Kyriakos Pierrakakis.

G7 finance ministers, including Portugal's Joaquim Miranda Sarmento, decided not to release strategic oil reserves despite prices rising near $120 per barrel due to Middle East tensions. Sarmento warned that releasing limited reserves would only provide temporary relief and should be saved for actual emergency supply disruptions. Portugal currently maintains reserves covering approximately 90 days of consumption, which the government views as a vital buffer against total supply failure. Drivers and residents should be aware that fuel prices may remain volatile as international markets react to the closure of the Strait of Hormuz.

Update: Diesel prices see historic 20-cent daily surge

Fuel prices in Portugal experienced a significant jump this Monday, with diesel (gasóleo) increasing by 20 cents per litre, surpassing the price of petrol for the first time since 2022. While Brent crude prices fluctuated wildly, touching $119 before closing near $99, the immediate impact at Portuguese pumps reflects the high volatility in global energy markets.

The government is confident that the European Commission will not oppose its temporary discount on the Tax on Petroleum and Energy Products (Imposto sobre os Produtos Petrolíferos or ISP) for diesel. Finance Minister Joaquim Miranda Sarmento stated that the measure is extraordinary and temporary, designed to mitigate the impact of high energy prices caused by conflict in the Middle East. Drivers should note that the discount is intended to provide immediate relief at the pump while the government monitors international oil market volatility. The tax relief remains a key part of the national strategy to manage rising living costs.

The Portuguese have significantly increased their savings rate, reaching 12.5% of disposable income in Q3 2025, the highest in over two decades. However, there is a growing confusion between saving and investing, leading to financial losses for many. This trend highlights a shift in financial behavior among Portuguese households, as they prioritize saving but may not fully understand the implications of their financial decisions.

Fitch has maintained Portugal's sovereign debt rating at 'A' while upgrading the outlook from stable to positive. This decision reflects expectations of a significant decline in public debt relative to GDP, supported by prudent fiscal policies. The agency forecasts a deficit of 0.8% for this year, primarily due to storm-related expenses and increased spending from the Recovery and Resilience Plan. Fitch anticipates a budget surplus by 2025 and a gradual decrease in the deficit to 0.5% by 2027, despite potential risks from storm costs. This marks the second positive outlook adjustment for Portugal's rating in a month, following a similar move by S&P.

Banco de Fomento plans to place over 20 billion euros in guarantees in the market this year, as stated by the CEO. The initiative comes in response to a slower economy, with a goal to recover losses incurred over the past two years within the next ten months.

In a week marked by improved weather and strong corporate earnings, the markets reflect a sense of optimism despite ongoing global uncertainties, including potential tariffs from Trump and the prolonged war in Ukraine. Major companies like Millennium BCP, EDP, and Caixa Geral de Depósitos reported record profits, suggesting that the anticipated negative behaviors in response to uncertainty—such as reduced consumption and investment—are not materializing. Instead, the global economy appears to be on a growth trajectory, with companies exceeding expectations. This shift indicates that uncertainty has become normalized, leading to a new market dynamic where decisions and investments are not hindered by fear, ultimately suggesting that uncertainty may be the new bull market.

Caixa Geral de Depósitos (CGD) recorded profits of €1.9 billion in 2025, the highest result ever for the public bank. It will pay a dividend of €1.25 billion to the State, announced this Thursday. The result is up 10% compared to 2024 and has an extraordinary factor that helps to explain ...

Update: Caixa pays record €1.25 billion dividend

CGD will distribute €1.25 billion — roughly 66% of the €1.9 billion profit — to the State, a payment CEO Paulo Macedo described as likely the largest dividend ever in Portuguese banking. The sale of its stake in Águas de Portugal was an extraordinary contributor to the record result.

In 2023, Portugal ranks among the EU countries with the lowest purchasing power, with its average annual income allowing for the purchase of only 11 baskets of essential goods, significantly less than the 24 baskets that can be afforded by an average Luxembourger. This disparity highlights the economic challenges faced by Portuguese residents, particularly in the context of rising housing costs.

In January, families have significantly increased their investments in savings certificates, contributing an additional 13 million euros per day, leading to a total of 40.6 billion euros in investments for the month. This trend indicates a strong focus on saving as an economic strategy at the start of the year.

Contributions from foreigners to Portugal's Social Security have seen a significant increase, rising eightfold over the past decade. The positive balance between contributions and benefits has grown more than nine times in 11 years, with the number of contributing women increasing 4.5 times and men 6.1 times. Starting this Friday, monthly statistics will be available, highlighting the growing role of foreign contributions, particularly from Brazilians, who contributed 6 billion euros since 2015.

Foreign workers now make up 17.6% of Social Security contributors, a significant rise from 4.5% a decade ago. In December 2025, over 840,000 immigrant professionals contributed, reflecting a 5.4-fold increase since December 2015. Total contributions reached over 4.1 billion euros last year, an 8.5-fold increase from 491 million euros a decade earlier. This data, released by the Ministry of Labour, aims to dispel myths about immigrants and their contributions, with Secretary of State Filipa Lima emphasizing the need for transparency in statistics. The dashboard will provide detailed monthly updates on contributions by nationality and age, highlighting a notable increase in contributions from foreign workers, particularly in agriculture, hospitality, administrative services, and construction.

Press review: Storms in January and February have pushed the food basket to a four‑year high, with prices rising consecutively since early 2026 as greenhouse destruction and higher transport costs bite, warns Deco Proteste. Jornal de Notícias and other outlets flag further deterioration in vegetable and fruit bills, while the state faces millions in costs to recover at‑risk companies. Coverage also notes a controversial overlap in business figures linked to a human‑trafficking case, a resigning INEM training director earning €5,700 while working remotely, and the ongoing hardship in Amor, Leiria, where residents describe daily struggle after the storms.

The government is in a unique financial position with a significant budget surplus, allowing it to allocate resources effectively in response to the ongoing disaster.

In 2025, tax and contribution revenue increased by 7.5%, surpassing the growth rate of nominal GDP, according to data from the Ministry of Finance. This growth occurred despite an income tax cut, indicating a robust performance in tax collection relative to economic expansion.

DGERT data show notified collective redundancies rose by about 11% in 2025 to 552 — the highest annual total since 2020 (698). The January–December 2025 figure and monthly patterns indicate a rising trend in collective layoffs, with numbers approaching levels seen during the Covid‑19 pandemic, signalling renewed pressure on the labour market and potential legal and social implications for affected sectors.

Rolling live coverage on 2 February of UK and global markets, providing timely updates and analytical context on share prices, bond yields, currencies and commodities. Coverage highlights economic indicators (inflation, PMIs, employment data), central bank developments, major corporate news and market-moving events to help investors and readers interpret intraday moves and broader trends.

Iberian-focused domestic equity funds were among the year's top performers, mirroring the PSI's 29.6% surge and the IBEX 35's extraordinary 49% rally. Funds with high exposure to domestic sectors — notably banks, energy and cyclicals tied to export recovery — tended to outperform broader, more diversified strategies as macro momentum, improving corporate earnings and investor rotation into regional risk drove returns. The standout performance highlights near-term opportunities for investors seeking local equity exposure, while also prompting questions about stretched valuations and the need to rebalance portfolios against risk and diversification objectives.

EURIBOR's recent stabilisation underlines the importance of looking beyond sensational headlines and focusing on what affects households day to day. The move gives many borrowers breathing space — repayments on a €150,000 loan due for review in February would shift to between €634 and €652 — yet longer-term pressures remain evident: the accumulated loss of purchasing power over 25 years has already exceeded 30 per cent. The paradox of global shocks and mortgage-rate dynamics shows why policymakers, markets and households must prioritise practical indicators that influence living standards.