Europe has spent an additional €100 billion on energy due to the war in the Middle East

The European Union has already spent more than €100 billion extra on energy this year, even though import volumes have remained roughly the same. European Commissioner for Energy Dan Jørgensen attributes the sharp rise in costs to the energy crisis that arose amid the war between the U.S. and Iran and disruptions to supplies through the Strait of Hormuz. Now, EU countries are looking for ways to get through the winter amid high gas and oil prices.

 

The European Union has already spent more than €100 billion more on energy than it did for the same volume of supplies in the past. This was stated by European Commissioner for Energy Dan Jørgensen on the eve of an informal meeting of EU energy ministers in Dublin. According to Jørgensen, the problem is not that Europe has started buying much more gas or oil. The Union is receiving roughly the same volumes but is paying significantly more for them due to high global prices. “This year, we have already exceeded €100 billion in additional payments for energy without receiving a single additional molecule of gas or oil,” said the European Commissioner.

The war in the Middle East has had a major impact on rising prices. After hostilities broke out between the U.S. and Iran in late February and Iran closed the Strait of Hormuz, the global market faced the risk of disruptions in oil and gas supplies. A significant portion of global energy trade passes through the strait. Europe is particularly vulnerable to such changes, as it relies heavily on imported fuel. That is why, even without a physical energy shortage, rising global prices quickly translate into higher costs for European countries, businesses, and consumers.

The situation has become one of the main topics at the meeting of EU energy ministers, which is taking place on September 28–29 in Dublin. Representatives from member states are discussing how to prepare for winter and prevent a sharp deterioration in the energy market.

Jørgensen called on EU countries to take action on several fronts simultaneously. These include reducing gas and electricity consumption, further filling gas storage facilities, and preparing temporary measures that could help mitigate the impact of high prices on the public and businesses. He had previously called on EU governments to reduce energy demand ahead of winter.

Gas reserves remain a separate issue. As of the end of September, EU storage facilities were approximately 70% full, which is lower than the figure for the same period last year. The European Union wants to increase reserves before the start of the cold season. At the same time, the EU does not want to return to large-scale, long-term subsidies that would simply offset high prices. Jorgensen advocates for targeted and temporary measures aimed primarily at those consumers and sectors that have been hardest hit by rising energy costs. European leaders have previously supported this approach.

The European Commissioner also reiterated his call for Europe to accelerate the transition to domestically produced electricity and reduce its dependence on imported fossil fuels. This primarily involves the development of renewable energy and the electrification of transportation, industry, and heating. The European Commission believes this will help the EU become less dependent on sharp spikes in oil and gas prices and on the situation in supplier countries.

For Europe, the current crisis has served as yet another reminder of the risks of dependence on fossil fuels. A sharp rise in prices had already occurred following the start of Russia’s full-scale invasion of Ukraine in 2022. Now, the war in the Middle East and problems with transporting oil and gas through the Strait of Hormuz have dealt another blow to the energy market.

As a result, the EU is currently trying to navigate another difficult heating season while simultaneously reducing its dependence on imported energy sources in the future. The short-term goal for EU member states is to ensure sufficient supplies and keep prices in check, while the long-term goal is to increase domestic energy production and reduce dependence on the volatility of the global market. This was stated by European Commissioner for Energy Dan Jørgensen, as quoted by the Financial Times.