EU Warns of Price Crisis Amid Middle East Conflict

The European Commission has urged EU member states to take measures to reduce gas and electricity consumption ahead of winter, warning of a possible price crisis linked to a supply crisis in the Middle East.

European Commissioner for Energy Dan Jørgensen wrote to energy ministers of the 27 countries that making up the bloc, highlighting the region's dependence on imported fossil fuels, which makes it vulnerable to shocks in energy markets.

Gas prices have more than doubled since the start of the US-led war against Iran in late February, with about 20% of global oil and liquefied natural gas volumes usually transported through the Strait of Hormuz.

Jørgensen noted that companies in the EU are being weakened by rising energy costs, while governments face pressure from increasing household bills. He also pointed out that filling gas storage facilities is becoming more difficult due to high gas prices exceeding the cost of winter contracts, and suggested lowering the target level for filling these facilities to 80% could ease pressure on prices.

The Commissioner proposed several demand-reduction measures, including limiting temperatures in public buildings, preventing outdoor heating, and switching off unnecessary outdoor lighting. He emphasized that EU rules allow a deviation of 10 percentage points from the 90% target for filling gas storage facilities before the start of the heating season, with an additional five percentage points allowed under unfavorable market conditions.