The European Commission has warned that the ongoing U.S.-Israeli conflict with Iran risks triggering an energy price crisis across the bloc and urged member states to consider measures to curb demand, according to a letter obtained by Reuters.
EU economy and finance ministers are gathering in Brussels on Monday and Tuesday to discuss responses to surging energy prices and anticipated inflation stemming from the fighting in the Middle East. French Economy Minister Roland Lescure said after chairing a G7 finance ministers meeting that the bloc is prepared to take coordinated steps including the release of strategic oil stockpiles, though he stopped short of confirming any agreement to unlock reserves.
German Vice-Chancellor Lars Klingbeil echoed the cautious tone, saying Berlin is open to tapping oil reserves but "this is not the right time." The International Energy Agency's member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry-held stocks under government obligation.
Oil prices have surged since Israeli and U.S. attacks on Iran began on Feb. 28, which killed some 40 Iranian leaders including Supreme Leader Ayatollah Ali Khamenei. His son Mojtaba Khamenei was elected successor on Monday. The conflict has spread to Lebanon and Gulf countries, with Iranian retaliatory strikes hitting civilian energy facilities and U.S. bases.
Brent crude rose to $119.50 a barrel early Monday before falling to around $107.80 after the Financial Times reported that releasing reserve oil was being discussed.
Further supply disruptions have compounded the outlook. Qatar announced the suspension of its LNG production on March 4, Israel struck Iranian energy infrastructure over the weekend, and passage through the Strait of Hormuz remains suspended.
European Commissioner for Energy Dan Jorgensen said the current situation differs significantly from the energy crisis that erupted after Russia's full-scale invasion of Ukraine in February 2022. "Thanks to the decisive actions we have taken over the past years, Europe's energy system is better prepared and way more resilient today," Jorgensen wrote on X. He called for expanding clean renewable energy and improving energy efficiency.
Spanish Economy Minister Carlos Cuerpo told journalists the EU should draw lessons from the 2022 crisis response. An EU government official noted that while the 2022 crisis required an "infrastructure reset" with new suppliers, the current scenario could see prices fall faster if reserves are released and shipping routes reopen.
The talks are also expected to address macroeconomic impacts, with euro-area ministers discussing the war's inflationary effect with the European Central Bank. EU ministers are not expected to present a unified strategy by the end of the meetings; instead, member states will likely submit national assessments of the conflict's impact on their energy markets.
