On the tenth day of the attack by the United States and Israel on Iran, the repercussions of which are having a major impact on the financial markets (the price of a barrel of oil has passed the $100 mark) and on everyday life, the European Finance Ministers took stock of the surge in energy prices on Monday 9 March at meetings at European and international level.
The political players delivered a message designed to reassure: European countries do not have a hydrocarbon supply problem, unlike Asian countries, and the situation is not the same as that experienced in 2022, when Russia invaded Ukraine.
According to the European Commission, the EU is well prepared thanks to national strategic reserves and the diversification of both gas and oil supplies. “All Member States have between 85 to 90 days of stocks or equivalent, including Hungary and Slovakia”, said Anna-Kaisa Itkonen, Energy spokeswoman.
At this stage, therefore, it is not a question of reproducing emergency budgetary energy measures such as those taken in 2022 at European Union level.
Nevertheless, the President of the Eurogroup, Kyriakos Pierrakakis, admitted that this diagnostic and coordination exercise was being carried out “in ‘crisis management’ mode”. “We are open to discussing measures. (...) We have a ‘toolbox’ inherited from the Russian invasion, but it needs to be adapted. We’re not there yet”, he said. In his view, the European economy is in a position to absorb “temporary shocks”, but must be prepared “for a prolonged period of instability”.
Any European action will depend on how long the war in the Middle East lasts.
If this war lasts “a few weeks”, there will be “no major impact”, but if it is prolonged, it could lead to “a substantial inflationary shock”, analysed the European Commissioner for Economy, Valdis Dombrovskis, calling on his counterparts to “keep a cool head”.
G7 ‘Finances’. On Monday, France called an emergency meeting of the G7 Finance Ministers.
“Today, there are no oil and gas supply problems in either Europe or the United States. However, we are looking at ways of stabilising flows, including - why not - releasing strategic stocks”, said French Minister Roland Lescure, also referring to US proposals on “insurance”.
In their press release, the G7 countries announced that they would exchange as much as necessary “to coordinate (their) actions”. They say they are “ready to take necessary measures, including to support global supply of energy such as stockpile release”.
According to a diplomatic source, none of the G7 countries opposed the release of strategic stocks, a measure taken twice after the Russian invasion. But this option is still in the technical analysis phase.
According to Mr Dombrovskis, an ‘Energy’ G7 meeting will be held on Tuesday, while an extraordinary Summit of the G7 countries was mentioned but not confirmed on Monday evening.
At European level, a number of meetings have been announced in connection with the war in the Middle East: the Cyprus Presidency of the EU Council will convene the ‘IPCR’ crisis response mechanism on Tuesday, and the Commission has called a meeting of the Oil Coordination Group on Thursday.
According to one European diplomat, the Middle East crisis and its economic repercussions on the EU will “certainly” be discussed at the European Summit on 19 and 20 March. According to him, there is no proposal for “EU-level funding”, but the question may be raised in the coming weeks.
First national measures. Several Member States are not waiting for decisions to be taken at European and international level to take action against rising energy prices.
Portugal has approved a reduction of several cents in fuel prices. Hungary and Croatia are going to cap petrol and diesel prices.
In France, where 500 checks are planned at service stations this week, the government is refusing, at this stage, to consider public aid or lowering VAT and excise duty on petroleum products, as these measures would have a major budgetary impact.
The Spanish Minister, Carlos Cuerpo, noted the negative impact of the rise in pump prices on sectors such as “transport and fisheries”. “Spain will protect its citizens and businesses”, he promised, drawing on the “experience” acquired during the inflationary shock of the war in Ukraine.
Turning the current crisis into an opportunity, Mr Pierrakakis and several Ministers felt that soaring energy prices reinforce the urgent need for Europeans to strengthen economic competitiveness through greater integration of capital markets and increased interconnection of national energy markets (see EUROPE 13823/6). (Original version in French by Mathieu Bion with Pauline Denys and Bernard Denuit)