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Summary

Brussels is particularly concerned in the short term about Europe's supplies of refined petroleum products such as jet fuel and diesel.

Five European Union finance ministers, in a letter to the European Commission seen by Reuters on Saturday, called for a windfall tax on energy companies' profits in response to rising fuel prices caused by the war on Iran.

The finance ministers of Germany, Italy, Spain, Portugal and Austria made the joint appeal in a letter on Friday, saying the measure would signal that they are "united and capable of taking action."

They wrote that it "would also send a clear message that those who benefit from the consequences of the war must play their role in alleviating the burden on the general public."

Previous Price Shock

Oil and gas prices have risen sharply since the start of US and Israeli strikes on Iran on February 28, causing a price shock similar to the energy crisis Europe experienced after Russia's war on Ukraine in 2022, even though EU countries now get more energy from renewable sources.

In the letter addressed to EU Climate Commissioner Wopke Hoekstra, the ministers referred to a similar emergency tax in 2022 to address high energy prices.

They wrote, "Given the current market distortions and financial constraints, the European Commission should quickly develop a similar contribution instrument at EU level based on a solid legal basis."

The letter did not mention any details about the level of the windfall tax proposed by the ministers, or which companies would be subject to it.

Reviving Energy Crisis Measures

EU Energy Commissioner Dan Jørgensen said on Tuesday that the union is studying the revival of energy crisis measures used in 2022, including proposals to limit grid fees and taxes on electricity.

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The EU implemented a set of emergency policies in 2022 after Russia cut off gas supplies. These included setting an EU-wide gas price cap, imposing a windfall tax on energy companies, and setting targets to reduce gas demand.

Europe's heavy reliance on imported fuel makes it vulnerable to the impact of the conflict in the Middle East on global energy prices.

European gas prices have risen by more than 70 percent since the start of the US-Israeli war on Iran on February 28.

Jørgensen said Brussels is particularly concerned in the short term about Europe's supplies of refined petroleum products such as jet fuel and diesel.

France announced on Friday the launch of an emergency loan program to help small and medium-sized businesses affected by rising fuel prices due to the war in the Middle East.

Oil Rise Due to War

The French Economy Ministry said companies in the transport, agriculture and fishing sectors will be eligible for "quick fuel loans" worth up to 50,000 euros (57,600 dollars).

The program fulfills a pledge made last week by French Prime Minister Sébastien Lecornu, whose government, like others around the world, is seeking to contain the economic fallout from rising oil prices due to the war.

The ministry said in a statement that the public investment bank BPI France will provide the loans through a simplified digital process that allows funds to be disbursed within seven days.

The interest rate on the loans is 3.8 percent, and the repayment period is up to three years.

Separately, French Economy Minister Roland Lescure said he sent a letter to the European Commission asking it to investigate whether oil refineries within the European continent are exploiting the war to commit "abuses" in setting fuel prices.

In Italy, the government announced on Friday the extension of temporary fuel tax cuts for one month, which were due to expire on April 6.

Economy Minister Giancarlo Giorgetti said after a government meeting, "We are extending the fuel tax cut, which was due to expire on Easter Monday, until next May 1."

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More about: European Union, Energy companies, Oil prices, Strait of Hormuz, Iran war