EU braces for energy crisis as Iran conflict adds €6B to import costs
EU Commission President Ursula von der Leyen has urged member states to avoid repeating the errors of the 2022-2023 energy crisis. Her warnings come as the conflict in Iran has already added €6 billion to Europe's oil and gas import costs. Despite this, the EU's fossil fuel supply remains secure for now.
The ongoing Israel-Iran war has reshaped Europe's energy landscape, cutting reliance on Middle Eastern imports from around 15% before the conflict to roughly 8% by early 2026. This shift follows a push for diversification, with increased liquefied natural gas (LNG) supplies from the US and Norway helping to stabilise markets.
The war's early impact hit hardest in Germany, Italy, and the Netherlands, where disrupted Persian Gulf tanker routes caused supply chain strain. However, strategic reserves and new pipeline infrastructure softened the blow. By early 2026, wholesale gas prices had fallen from €40 per megawatt-hour (MWh) to €35/MWh, while oil dropped from $85 to $75 per barrel—a net 12% decrease in average energy costs.
Von der Leyen has now outlined a series of measures to strengthen Europe's energy resilience. She backs long-term power purchase agreements (PPAs) for renewable projects, aiming to reduce volatility in electricity pricing. At the same time, she supports extending the lifespan of existing nuclear plants, citing their role in providing stable, low-cost, and low-emission power.
The Commission also plans to reform the EU's Emissions Trading System (ETS) to reflect current challenges. Von der Leyen defended the system's core principles but stressed the need for adjustments to prevent market distortions. She cautioned against broad, untargeted policies that could slow decarbonisation efforts or increase fossil fuel dependence.
Beyond energy, the Commission will propose a 28th EU corporate law to simplify business registration. Under the new rules, companies could register entirely online within 48 hours for no more than €100, with no minimum capital requirements. The move aims to cut red tape and boost economic agility.
Despite calls for change, von der Leyen confirmed the EU will retain the merit-order system for electricity pricing. She argued that the model remains effective in balancing supply and demand while supporting the transition to cleaner energy sources.
The EU's energy security currently holds firm, but the financial strain from geopolitical tensions is clear. Diversification efforts have lowered dependence on Middle Eastern imports and eased price pressures. Meanwhile, proposed reforms to corporate law and energy markets aim to reinforce stability and sustainability across the bloc.
Von der Leyen's strategy focuses on targeted interventions rather than sweeping changes. The emphasis remains on accelerating renewable adoption, optimising existing infrastructure, and maintaining market mechanisms that align with long-term climate goals.
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