As the Iran war enters its second month, EU energy ministers discussed on March 31 a coordinated response to protect EU citizens and industries from high energy prices. The conflict in the Middle East and the resulting economic disruption is increasingly impacting global oil and gas markets, leading to rising energy prices across the globe. Since the beginning of the conflict, prices in the EU have risen by around 70 percent for gas and by 50 percent for oil.
“Our energy supply is secure, and the European Union has already in place tools and rules to ensure its stability. However, a strong and coordinated response both at EU and national level is needed to protect our citizens and industries from the current energy price spikes,” Cyprus Energy, Commerce and Industry Minister Michael Damianos, whose country holds the rotating EU Presidency, said during an emergency informal video conference with EU energy ministers on the Iran war’s impact on European energy security of supply. “We must do so while safeguarding our energy independence on the pathway to a carbon-neutral energy sector,” he added.
Against this backdrop, ministers shared their assessments of the situation in the energy markets. They broadly acknowledged that the Union’s security of supply remains protected at this stage. At the same time, they also concurred on the need for coordinated action at EU and national level, in order to mitigate the impact of high energy prices, in particular for vulnerable households and businesses, the EU Council said in a press release.
In their interventions, EU energy ministers focused on concrete ways to address the volatility in the oil and gas markets in a coordinated manner within and beyond the EU, avoiding fragmented national responses and counteracting measures.
Ministers also agreed that a timely and smooth preparation for the upcoming winter season, with early gas storage injections, is essential in order to mitigate high prices and avoid market tensions. They also emphasized the importance of reducing the amount of energy being consumed.
Better to be prepared than sorry
The EU should be under no illusion that the consequences of the crisis in the Middle East for the energy markets will be short-lived, European Commissioner for Energy and Housing Dan Jørgensen said, adding that Europe must act in unity and close coordination.
Considering the market volatility stemming from the conflict in the Middle East and the closure of the Strait of Hormuz, the European Commission called on Member States on March 31 to make timely and coordinated preparations to secure the supply of oil and refined petroleum products as well as jet fuel in the EU.
The EU is well prepared, thanks to the obligation on Member States to maintain oil stocks and to have contingency plans in response to security of supply incidents. EU Member States are also contributing – by approximately 20 percent – to the global release of over 400 million barrels of emergency oil stocks coordinated by the International Energy Agency (IEA), the Commission said in a press release.
Acting together is essential
Even as the European Union’s supply remains secure for now, the EU must be ready for a potentially prolonged disruption of international energy trade, Jørgensen said. “This is why we need to act already now. And we need to act together, as a true Union. It is only by working together that we can be stronger, and we can protect our citizens and businesses more effectively,” the EU Energy Commissioner said.
In a letter addressed to all EU Energy Ministers, Jørgensen urged the Member States to make full use of the meetings under the Oil Coordination Group and Energy Union Task Force Security to ensure good coordination, as well as to consider the promotion of demand saving measures, with particular attention to the transport sector, as advised by the IEA in its 10-points plan to cut oil use.
Robust monitoring, rapid information-sharing mechanisms and coordination remain essential, the EU Commission said, adding that any emergency risks or material changes in oil supply and industry conditions, including commercial stocks, should be tracked and notified to the Commission to ensure continuous assessment and coordinated action.
In the same spirit, the Commission said Member States should refrain from taking measures that may increase fuel consumption, limit the free flow of petroleum products or disincentivize EU refinery output. They should also consult with their neighboring Member States and the Commission to preserve EU-wide coherence and the functioning of the internal market.
“To safeguard the availability of petroleum products on the EU market, any non-emergency refinery maintenance should be deferred,” the Commission said, adding, “At the same time, increasing the uptake of biofuels could help substitute for fossil petroleum products and alleviate pressure on the market.”
There was no discussion of relaxation of EU energy sanctions on Russia in order to increase supply or to control costs.