Energy ministers from the European Union convened in Brussels on Monday for urgent discussions on surging energy costs, as global oil prices climbed above $100 per barrel amid escalating tensions linked to the conflict in Iran.
The emergency talks among representatives of the bloc’s 27 member states are expected to set the stage for a broader summit scheduled for Thursday, where EU leaders will deliberate on policy options to shield households and businesses from rising fuel and electricity costs.
Several countries have already begun implementing national measures to cushion the impact. Croatia and Hungary have introduced caps on fuel prices, while Greece has opted to limit profit margins on gasoline sales.
The EU’s energy commissioner, Dan Jørgensen, has encouraged governments across the bloc to consider reducing energy-related taxes and levies where fiscal space allows, as part of efforts to soften the price shock.
In France, energy major TotalEnergies has agreed to cap gasoline prices following pressure from the government, which has also intensified monitoring of retail fuel stations in response to the surge in costs.
At the international level, the International Energy Agency, whose membership includes 32 countries, has approved the release of approximately 400 million barrels of crude oil from strategic reserves, the largest coordinated release in its history—in an attempt to stabilize global markets.
The price surge has also reignited debate over Europe’s electricity market design. Under the current structure, wholesale electricity prices are determined by the cost of the most expensive power plant needed to meet demand at a given time. During peak demand periods, this is often gas-fired power stations, which means higher natural gas prices can quickly translate into more expensive electricity across the grid.
According to Marc Baudry, an economist at Paris Dauphine University, reliance on fossil-fuel-powered plants during periods of high demand ensures that electricity prices remain closely tied to gas costs.
The latest price spike has renewed calls from Italy and several other countries to revisit the EU’s electricity market framework. The system was last reformed in 2024 to reduce exposure to volatile gas prices, but some governments argue further adjustments may be necessary.
Meanwhile, Ursula von der Leyen, president of the European Commission, said the bloc is exploring options such as subsidizing or temporarily capping the gas price used to calculate electricity costs. A similar price-correction mechanism introduced after Russia's invasion of Ukraine was never triggered due to stringent activation conditions.
Another area of contention is the EU’s carbon trading system, which requires heavy emitters to purchase permits for greenhouse gas emissions. Some governments, particularly in central Europe, are advocating reforms or a temporary suspension of the scheme, arguing that it contributes to rising energy bills.
However, several countries, including Sweden, Spain, and Netherlands have opposed major changes, warning that weakening the carbon market could undermine a central pillar of the EU’s climate strategy.
Officials in Brussels have indicated that proposals to adjust the two-decade-old carbon market framework are being prepared, although they have signaled that any changes are unlikely to amount to a fundamental overhaul.
The ongoing discussions underscore the growing pressure on European governments to balance energy affordability with long-term climate commitments as geopolitical tensions continue to influence global oil and gas markets.