The war between the US, Israel, and Iran is starting to have serious effects on the European economy. The rapid increase in energy prices has put growing pressure on the European Commission to come up with concrete measures to protect economies and consumers.
Several member states are unhappy with Brussels’ cautious approach and are calling for the activation of emergency tools used during the energy crisis caused by Russia’s invasion of Ukraine in 2022, writes Politico.
Oil has crossed the $100 mark
Since the start of the Gulf war 12 days ago, oil and gas prices have surged on international markets. In the first week of the conflict, oil surpassed the $100 per barrel threshold - the highest level in recent years - before dropping to around $88 on Tuesday.
The price increase risks quickly translating into higher bills for Europeans and a new wave of inflationary pressures at a time when the continent's economy is still trying to stabilize after the 2022 energy shock.
However, the European Commission has not activated any EU-level intervention mechanisms yet. European Energy Commissioner Dan Jørgensen stated on Tuesday that there is "no immediate risk to energy supply."
Brussels prefers long-term solutions
The European executive has so far emphasized structural measures: diversifying energy sources, reducing reliance on fossil fuels, and accelerating investments in renewable energy.
The Commission has also called on member states to reduce energy bills by lowering domestic energy taxes.
However, for some governments, these solutions are too slow compared to current economic pressures.
"Ten-year plans will not solve the problem," said a Slovenian official quoted by Politico, referring to the need for rapid measures to limit the impact of price increases.
Italy Leads the Charge for Emergency Measures
Italy is one of the countries most insistent on a rapid intervention by Brussels. Italian Finance Minister Giancarlo Giorgetti was the first to publicly criticize the Commission's cautious stance, calling for the activation of tools used during the 2022 energy crisis.
Italy has some of the highest energy costs in Europe, largely due to its dependence on imported gas. This vulnerability risks amplifying the conflict's impact on electricity bills.
"Italy is very concerned about the inflation impact due to the inefficient energy mix we have," said an Italian official.
Rome argues that the response must be coordinated at the European level. Forza Italia party deputy Raffaele Nevi warned that individual state reactions could create economic imbalances within the Union.
What Measures Are Requested in Brussels
Governments calling for swift action want the EU to activate intervention tools previously used. These include relaxing state aid rules so that governments can subsidize consumers and companies, coordinating energy consumption reductions, or even capping gas prices.
There have also been calls to amend or suspend the European Emission Trading System (ETS). However, European Commission Vice President for the Green Deal, Teresa Ribera, rejected this option.
Nevertheless, German Chancellor Friedrich Merz called for expediting the review of this system. A document prepared for the upcoming European summit proposes reducing the carbon price impact on electricity bills without undermining the ETS's role in the climate transition.
EU is Divided on Intervention
Not all member states support emergency measures. Countries with stronger economies and a higher share of renewable energy prefer market-based solutions. These governments fear that European interventions could distort energy markets or transfer resources to more vulnerable states.
"We are not fans of emergency regulations. We prefer market solutions," said a diplomat from a Northern European country. However, he admitted that if the energy situation were to seriously deteriorate, his country might support EU-level interventions.
The Decision Lies with the European Commission Now
Several governments are waiting for the European Commission to present concrete proposals at next week's Energy Ministers meeting or at the end-of-month EU leaders' summit.
Slovak Prime Minister Robert Fico explicitly requested "concrete proposals," not just "general statements."
A spokesperson for the European Commission confirmed that discussions are ongoing and that Ursula von der Leyen will present an assessment of the situation and possible options at the next EU leaders' meeting.
IEA Considers Largest Release of Strategic Oil Reserves
Meanwhile, the International Energy Agency (IEA) is considering the possibility of the largest-ever use of strategic oil reserves in an attempt to temper the price surge caused by the Middle East conflict.
According to Reuters, citing the Wall Street Journal, the agency is discussing releasing a record volume of oil from strategic reserves. A similar measure was taken in 2022 after the Ukraine war broke out, releasing 182 million barrels in two tranches.
IEA member states are set to discuss the proposal in an extraordinary meeting, with a decision expected on Wednesday. However, the plan requires unanimous approval, and opposition from a single state could delay its adoption.
G.P.