Iran war: two months patching the present instead of planning the future
Two months after the outbreak of the war in Iran, we update our earlier assessment (Moscovici, Nguyen 2026) of the additional cost generated by the blockade of the Strait of Hormuz, which we now estimate at over €39 billion. To date, we have identified more than 180 measures adopted across 22 of the 27 Member States of the European Union (EU), totalling €13.6 billion in announced spending. Added to this is the cost of rising fossil fuel import prices, which we estimate at approximately €26 billion. By way of illustration, while the EU needs to invest around €800 billion annually in its energy transition (Draghi 2024), it has just devoted nearly 5% of that figure almost exclusively to fossil fuels.
The tracker is accessible here.
Following the extension of the ceasefire brokered by Donald Trump, oil (Brent) and gas (TTF) markets have stabilised at around $100 per barrel and €40/MWh respectively. While the risk of military escalation – which would trigger a renewed surge in hydrocarbon prices – appears to be receding, this status quo provides an opportunity to take stock of the support measures put in place by Member States as of 27 April 2026. We assess their relevance against the three criteria set out by the European Commission in its AccelerateEU communication of 22 April – timely, temporary and temporary – to which we add a fourth, highlighted by the European Central Bank: tailored, understood as preserving the price signal logic.
More broadly, the marked heterogeneity of responses – in nature, duration and scale – primarily reflects the specificities of national contexts. Nevertheless, several common trends emerge. It is clear from this inventory that the 22 Member States that have adopted measures have, quite logically, responded to the price signal: the vast majority (19 states) introduced their measures between mid March and early April, during which oil prices consistently exceeded $100 per barrel, with temporary measures (14 states), understood as not exceeding the end of June. Yet, as with responses to the previous crisis (OECD 2023), these measures remain predominantly non-targeted for nearly two thirds of them – a pattern that risks accustoming citizens to blanket mechanisms such as price caps (12 states) and/or fiscal measures including VAT cuts, excise reductions or tax hike deferrals (19 states). Such interventions risk entrenching what amounts to fossil fuel subsidies, creating a lock-in effect. This risk is all the more pronounced given that, despite the geopolitical lull, prices remain well above pre-war levels – with the barrel holding above $100 despite the halt in strikes. In this context, a premature withdrawal of support measures could reignite social tensions. The Irish example, where massive protests and blockades prompted the government to announce new measures in mid-April, illustrates this political constraint.
Beyond the economic dimension, such measures risk playing into the hands of populist forces – particularly the far right – in the short and longer term. First, by legitimising their core demands: blanket price freezes and cuts to fossil fuel taxation. Far from merely boosting their political credibility, these dynamics carry damaging medium to long-term consequences. Second, in addition to being particularly costly for public finances (2.2% of cumulative European GDP between 2022 and 2024), these instruments risk becoming entrenched over time as demonstrated above. Once the crisis is over, the fiscal space consumed will require adjustments elsewhere in public spending – and the resulting austerity, inherently unpopular, would provide fertile ground for far-right forces in future elections (whose dates are displayed in our tracker).
This fragmentation must also be read through several enabling or constraining factors. Political stability is the first: states with a stable majority were able to act at the right time (19 states), while those facing a government in formation (Denmark), a thin and recent majority (Netherlands), or an approaching electoral calendar (Sweden) were slower to respond. In the Bulgarian case, the fact that elections were scheduled at the height of the crisis (19 April 2026) also constrained the ambition of the response, pending a stable and legitimate majority.
Fiscal space – measured through the level of public deficit – is a second factor. Our tracker documents the scale of national responses relative to the Maastricht criterion, pointing to a descriptive correlation – not a causal relationship – whereby most states with a budget balance better than -3% mobilised relatively larger amounts (as a share of GDP) than those with constrained public finances. Spain, Greece and Ireland deployed substantial packages commensurate with their fiscal headroom. Belgium – with the highest public deficit in the euro area – by contrast limited itself to calls for energy consumption restraint.
Demand-side measures, pursued by several states, thus reflect a combination of budgetary constraints (Belgium, France), political constraints (Denmark, Sweden), or supply security concerns (Slovenia). While these countries are already calling on households and businesses to reduce consumption, others are pre-positioning mechanisms to be activated if conditions deteriorate – such as the Netherlands (Phase 1 of four in its national oil crisis plan already triggered) or Portugal, which has enshrined demand reduction thresholds in law.
Yet fiscal constraint need not be determinative. In the French case, with limited room for manoeuvre, the government has opted for a pragmatic combination of targeted measures and the acceleration of an electrification plan designed to boost heat pump installation and electric vehicle uptake. This approach remains the exception: to date, only three states (France, Bulgaria, the Netherlands) have deployed exclusively or predominantly targeted measures, and only six (Croatia, Spain, France, the Netherlands, Portugal, Sweden) have adopted measures aimed at structurally reducing fossil fuel dependence through accelerated electrification. The total amount of these measures stands at around €600 million, to which several non-budgeted Spanish schemes can be added, estimated at €1.5 billion – representing roughly 15% of national spending dedicated to electrification. This reflects a degree of inertia in the public policy response, which, despite repeated energy shocks, continues to direct the bulk of resources towards short-term measures rather than structural ones. The evolution of the electrification rate across the EU – having increased by only 0.6 percentage points since 2021 – illustrates the persistent difficulty in turning crises into drivers of the energy transition.
Similarly, only four states (Bulgaria, Estonia, France, the Netherlands) meet the ECB’s criterion of a tailored response – one that preserves the price signal – as illustrated by Bulgaria’s decision to favour a flat-rate allowance targeted at the most vulnerable households over a blanket tax cut, or by Estonia’s approach of simply cancelling a previously scheduled excise increase.
Beyond the nature of the instruments themselves, the financing of these packages constitutes another differentiating factor. While most Member States rely on public borrowing, additional VAT revenues generated by higher prices, or internal budget reallocation, several governments have chosen to raise taxes on other bases – such as the Netherlands indexing alcohol excise from 2027, Greece raising the tax on online gambling winnings, or Germany mobilising a tobacco tax increase.Moreover, five Member States (Germany, Spain, Italy, Portugal, and Austria) have formally called on the European Commission to introduce a tax on windfall profits generated by energy companies. While this option has attracted broad interest, the European Commission has so far adopted a cautious approach, not considering the introduction of a harmonised EU-wide framework at this stage and leaving full discretion to Member States regarding the adoption and design of such measures.
Finally, several good practices deserve mention. The Netherlands has a crisis plan structured in four phases, activating progressive measures according to the severity of the shock. Lithuania opted for a 50% reduction on all domestic rail tickets – offering a credible alternative to car use without subsidising fuel. Ireland extended the payment window of its fuel allowance for low-income households, a targeted, swift and non-distortive measure. By contrast, several states have adopted measures contrary to EU law: Slovakia introduced a discriminatory pump price based on vehicle registration, while Hungary reserved its price ceiling for Hungarian-registered vehicles only. These restrictions fuel the “fuel tourism” phenomenon – drivers from border regions of countries with capped or reduced prices (Germany, Belgium, Slovakia, Bulgaria, Spain, Italy, Hungary) crossing over to refuel at lower cost, undermining the intended reach of national measures. The European Commission must therefore enforce single market rules and ensure a minimum level of coordination among Member States.
This fragmentation risks fuelling mutual distrust at a moment when coordination should be the priority – for instance, as we recommended as early as mid-March, through the adoption of a legal framework enabling demand reduction at European level (Nguyen, 2026). The widening divergences in the scale of measures deployed, partly shaped by differing fiscal capacities, further compound this dynamic. The additional relaxation of state aid rules warrants close monitoring, lest it encourage the adoption of pre caps or untargeted subsidies – even temporary ones. Finally, it should be noted that the measures catalogued to date focus exclusively on mitigating oil prices. Should the Strait of Hormuz blockade persist, Member States may be forced to intervene on gas prices ahead of next winter – a scenario far from unimaginable given the disruption already observed and the damage sustained by liquefaction infrastructure, and one that would further inflate the cost of Europe’s dependence on imported fossil fuels.
