Oil, gas prices won't immediately return to normal even if Iran war ends: EU energy commissioner

The consequences of the Middle East conflict on global energy markets will not be short-lived, a top European Union official warned on Tuesday, as surging fuel prices add billions to the bloc’s import bill.

“We should be under no illusion that the consequences of this crisis for the energy markets will be short-lived — because they won’t,” European Commissioner for Energy Dan Jørgensen said.

His remarks come as the conflict enters its second month, triggering sharp spikes in energy prices and raising concerns over prolonged volatility.

Jørgensen said gas prices in the EU have risen by around 70% and oil by 60% since the start of the conflict, adding that the bloc’s fossil fuel import bill has increased by €14 billion in just 30 days.

He said although there are no immediate oil and gas supply shortages in the 27-member bloc, there's pressure on diesel and jet fuel supply as well as “increasing constraints” in global gas markets that are resulting in higher electricity prices.

“What I find extremely important is to state as clearly as I can, that even if that peace is here tomorrow, still we will not go back to normal in a foreseeable future,” Jorgensen told a news conference after a meeting of EU energy ministers.

The situation is likely to increase cost pressures on industries and households, he said.

Calling for coordinated action, Jørgensen urged EU member states to avoid fragmented responses that could disrupt markets, and instead adopt targeted and temporary measures.

The European Commission is working on steps to ensure gas storage refilling and oil supply security, while preparing a support package to help shield consumers and businesses.

The “toolbox” of measures now in the works will be unveiled “quite soon” and will include ways to make it easier for states to decouple gas prices from electricity prices, the commissioner said.

Jorgensen said although he doesn't foresee a repeat of the 2022 natural gas crisis where companies reaped huge profits from a massive gas price hike, a one-time “windfall tax” on such companies “is a possibility.”

There are now “good opportunities” for member states to financially support vulnerable groups or industries now under “extraordinary stress” and that the Commission would make “these possibilities even simpler and wider,” said Jorgensen.

Jorgensen also encouraged EU members to consider the International Energy Agency's 10-point plan which includes work from home, reduced highway speeds, encouraging public transport and increasing car sharing.