EU ministers weigh oil price cap and windfall tax to rein in soaring energy costs

Published connected 27/03/2026 - 15:39 GMT+1•Updated 15:45

European Union concern ministers are considering capping lipid prices oregon taxing windfall profits arsenic they measurement a coordinated effect to rising vigor costs, amid surging earthy state and lipid prices driven by the warfare successful Iran.

Analysts pass that further terms spikes could echo the 2022 vigor crisis.

EU officials importune the bloc is amended prepared than successful 2022, erstwhile Russia’s penetration of Ukraine triggered terrible vigor shortages. They constituent to accrued home cleanable vigor accumulation and stronger infrastructure.

However, uncertainty remains precocious owed to the unpredictable duration of the conflict. Officials besides pass that the EU’s “financial manoeuvring country is much constricted than before," arsenic defence spending has increased.

Despite efforts to diversify supplies since 2022, Europe remains exposed to planetary shocks and indispensable beryllium acceptable for renewed volatility, adjacent if the concern falls abbreviated of a full-scale crisis, officials said.

Speaking aft a ministerial gathering successful Brussels connected Thursday, Economy Commissioner Valdis Dombrovskis said the “scale, severity and impact” of the warfare person intensified implicit the past 2 weeks.

He cited the closure of the Strait of Hormuz and attacks connected vigor infrastructure, which person pushed Brent crude above $100 a barrel and driven up earthy state prices.

“The cardinal contented is the duration and strength of the crisis, arsenic these volition find the standard of the vigor daze (…) Our shared anticipation is for de-escalation and avoiding large disruption to vigor infrastructure,” Eurogroup President Kyriakos Mihrakakis said.

Pierre Gramegna, managing manager of the European Stability Mechanism, warned that “even if the struggle were to extremity tomorrow, the consequences would stay with america for a agelong time.”

EU’s ‘toolbox’ nether treatment to tackle rising prices

Ministers discussed imaginable coordinated measures based connected a European Commission enactment dated 26 March, seen by Euronews, successful the beingness of International Energy Agency main Fatih Birol, who has warned astir an vigor situation much terrible than the 1970s.

As the semipermanent interaction of the Iran struggle is assessed, the Commission is urging subordinate states to accelerate the displacement to cleanable energy. Spain and Portugal are cited arsenic examples owed to their little vulnerability to terms volatility linked to renewables.

According to the note, renewables accounted for astir 48% of the EU’s energy premix successful 2025, up from 36% successful 2021, driven by upwind and solar. Over the aforesaid period, fossil fuels fell from 34% to 26%.

“Europe’s vigor modulation is simply a strategical objective, and nary short-term situation volition divert america from it,” Dombrovskis said.

The Commission is besides calling connected subordinate states to curb state and lipid demand, echoing an IEA warning issued connected 20 March, a time aft EU leaders announced “targeted and temporary” measures to easiness vigor prices.

Brussels has stressed specified measures should stay short-term and affordable to debar semipermanent fiscal strain.

The enactment besides recommends targeted enactment for households and businesses astir affected, alternatively than wide subsidies that hazard distorting markets and stretching nationalist finances.

To debar a repetition of fragmented nationalist responses seen successful erstwhile crises, the Commission is pushing for EU-level coordination, financed done existing tools specified arsenic c marketplace revenues oregon windfall taxes alternatively than caller borrowing.

In the coming weeks, the Commission is expected to propose little taxation rates connected energy and measures to guarantee it is taxed little heavy than fossil fuels. It volition besides outline plans to modernise the EU’s c market, including updates to escaped allocation benchmarks and a stronger Market Stability Reserve to bounds terms volatility.