Ursula Von Der Leyen Is Weighing A Gas Price Cap In Europe

The war involving Iran has sent shockwaves through global energy markets, pushing oil toward $100 a barrel and reviving fears of supply disruptions in the Strait of Hormuz. As governments scramble to protect households from rising electricity and fuel costs, G7 leaders are weighing a historic release of emergency oil reserves while Europe explores caps on gas prices and tax cuts to ease the pressure

Leaders of the Group of Seven held talks on Wednesday to discuss the impact of the war involving Iran on global energy supplies, as European governments look for ways to limit the short term effects on households and businesses.

The discussions come as oil and gas prices surge following attacks and retaliation in the Gulf that have disrupted energy flows through the Strait of Hormuz, one of the world’s most important shipping routes for crude oil.

To help stabilize markets, the International Energy Agency has proposed releasing emergency oil reserves of up to 400 million barrels from member countries, according to industry sources. If implemented, it would be the largest coordinated release in the organization’s history.

European Union officials, who will represent the bloc in the G7 discussions, are also preparing contingency measures. The EU’s oil coordination group is scheduled to meet on Thursday to review supply risks and potential responses.

Earlier on Wednesday, European Commission President Ursula von der Leyen said the EU executive was examining ways to reduce the influence of natural gas prices on electricity costs across the bloc.

“It is crucial that we reduce the cost impact, when gas sets the electricity price,” von der Leyen said in a speech at the European Parliament in Strasbourg.

“We are preparing different options: better use of Purchase Power Agreements and contracts for difference; state aid measures; exploring subsidizing or capping the gas price,” she added.

Gas prices have shown sharp volatility since the outbreak of the conflict, according to market data compiled by Bloomberg based on second month futures on the ICE exchange.

The EU introduced an emergency gas price cap mechanism during the energy crisis that followed Russia’s full scale invasion of Ukraine four years ago, though the mechanism was never activated.

Von der Leyen also defended the EU’s Emissions Trading System, the bloc’s flagship carbon market, against criticism from some business groups who argue that it adds to energy costs.

“Without ETS we would now consume 100 billion cubic meters more gas, again making us more vulnerable, more dependent and weaker,” von der Leyen said. “So we need ETS. But we need to modernize it.”

Across Europe, governments have already begun introducing temporary measures to cushion the impact of rising fuel costs. Greece has imposed a profit margin cap on fuel and grocery prices for three months, while Germany has restricted gas stations from increasing fuel prices more than once per day.

EU Energy Commissioner Dan Jørgensen said further steps may be necessary as the bloc faces pressure from member states to deliver quick relief for consumers.

“There is still more to be done” to reduce the spike in electricity and gas prices caused by instability in the Middle East, he said in an interview with Euronews.

Jørgensen called on national governments to reduce electricity taxes as the fastest way to bring down household bills.

“We’ve sent a very clear signal to the member states: we recommend you lower taxes on electricity,” Jørgensen told Euronews. “And you can do that tomorrow, you don’t have to wait for another legislative proposal to be put forward. It can be done short-term.”

EU leaders are expected to press the European Commission for additional proposals when they meet for a summit in Brussels next week. According to an internal document seen by Euronews, governments are likely to ask the Commission to present a revised proposal on the EU carbon market, the Emissions Trading System, by July 2026.

Jørgensen said the Commission was continuing to examine both immediate price pressures and the bloc’s longer term energy transition.

The conflict in the Gulf has roiled energy markets over the past week, with oil prices briefly reaching $100 per barrel, the largest jump since 2022.

U.S. President Donald Trump said on Tuesday that Iran would face severe military consequences if it attempted to mine the Strait of Hormuz and block shipping.

The United States has also floated plans to escort oil tankers through the strait, though details of such an operation remain unclear.

G7 leaders, including Trump, are expected to discuss the economic and geopolitical consequences of the conflict at Wednesday’s meeting hosted by French President Emmanuel Macron.

The International Energy Agency is also said to be preparing a coordinated release of strategic oil reserves of between 300 million and 400 million barrels to stabilize markets, industry sources said. The move would mark the largest intervention since the global energy shock triggered by Russia’s invasion of Ukraine in 2022.

By Mohd Hassan, edited by Faustine Ngila (Impact Newswire).

Get the latest news and insights that are shaping the world. Subscribe to Impact Newswire to stay informed and be part of the global conversation.

Got a story to share? Pitch it to us at info@impactnews-wire.com and reach the right audience worldwide