LONDON — Emergency support to help Brits grappling with rising bills should go to “those who need it most,” Chancellor Rachel Reeves said Tuesday — all-but ruling out a Liz Truss-style universal bailout in response to the Iran war. Pledging to “learn the mistakes of the past,” Reeves told MPs Tuesday that, while “contingency planning” is underway for “every eventuality,” the government will be “responsible” with public finances in any new state intervention. Oil and gas prices have soared since the conflict began, leading to higher fuel prices in the U.K. and sparking fears of a sharp increase in family and business energy bills when a regulated price cap period ends in July. Reeves said that, while the full impact of the crisis is not yet known, “the challenges may be significant.” In response to the 2022 energy crisis sparked by Russia’s invasion of Ukraine, the government of then-Prime Minister Liz Truss subsidized the bill of every household in the country — a policy backed by the Labour Party at the time. But Reeves today criticized the “unfunded, untargeted” 2022 package, saying it had pushed up borrowing, interest rates and inflation. Between 2022 and 2024, households in the top income decile received an average £1,350 of direct energy bill support, Reeves said, contributing to national debt “still being paid today.” However, the chancellor stopped short of explicitly ruling out a similar approach. She said: “Contingency planning is taking place for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our ironclad fiscal rules to keep inflation and interest rates as low as possible.” The government has already announced a £53 million package of support for households that use heating oil, which are not protected by the energy price cap. The majority of households that use gas and electricity will not see prices rise until July, when the next price cap period ends. The latest expert projections suggest the average annual bill could rise by more than £200 from current levels. On fuel pricing, Reeves said the government would give an update “within the next month,” amid pressure from opposition parties to extend a longstanding five pence tax relief on gasoline and diesel — the fuel duty cut — beyond its expiry date in September. U.K. gasoline prices have have risen by nearly 16 pence per liter since the war began, while diesel has risen by more than 31 pence.

LONDON — Keir Starmer’s keeping Britain out of the war in Iran — but he can’t duck the conflict’s grave economic consequences. In a sign of growing fears about the impact of the war on Britain, the prime minister chaired a rare meeting of the government’s emergency COBRA committee Monday night, joined by senior ministers and Governor of the Bank of England Andrew Bailey. Starmer’s top finance minister, Rachel Reeves, will update the House of Commons on the economic picture Tuesday, as an already-unpopular administration worries that chaos in the Middle East is shredding plans to lower the cost of living and get the British economy growing. For Starmer’s government — headed for potentially brutal local elections in May — the crisis in the Gulf risks a nightmare combination of a rise in energy prices, interest rates, inflation and the cost of government borrowing that threatens to undermine everything he’s done since winning office. Economists are now warning that even if Donald Trump’s promise of a “complete and total resolution of hostilities” with Iran were to bear fruit, the effects on the British economy could still last for months. Already there are signs of a split within Starmer’s party over how to respond. Labour MPs want the government to think seriously about action to protect households — but Starmer and Reeves have long talked up the need for fiscal responsibility, and economics are warning that there’s little room for maneuver. Fuel prices displayed at a Shell garage in Southam, Warwickshire on March 23, 2026. | Jacob King/PA Images via Getty Images Jim O’Neill, a former Treasury minister who served as an adviser to Reeves, told POLITICO the government should “not get sucked into reacting to every external shock” and “concentrate on boosting our underlying growth trend.” WHY THE UK IS SO HARD HIT Just before the outbreak of war, there was reason for Starmer and Reeves to feel quietly optimistic about the long-stagnant British economy. The Bank of England had expected inflation to fall back sustainably toward its two percent target for the first time in five years, giving the central bank the space to carry on cutting interest rates.  With the Iran war in full flow, it was forced to rewrite those forecasts at the Monetary Policy Committee’s meeting last week — and now sees inflation at around 3.5 percent by the summer. The U.K. is a big net importer of energy and also needs constant imports of foreign capital to fund its budget and current account deficits. That’s made it one of first targets in the financial markets’ crosshairs. The government’s cost of borrowing has risen by more than half a percentage point over the last month. That threatens both the real economy and Reeves’ painstakingly-negotiated budget arithmetic. Higher inflation means higher interest rates and a higher bill for servicing the government’s debt: fiscal watchdog the Office for Budget Responsibility estimates a one-point increase in inflation would add £7.3 billion to debt servicing costs in 2026-2027 alone. The effect on businesses and home owners is also likely to be chilling. Britain’s banks are already repricing their most popular mortgages, which are tied to the two-year gilt rate. Hundreds of mortgage products were pulled in a hurry after the MPC meeting last week, something that will hit the housing market and depress Reeves’ intake from both stamp duty and capital gains. Duncan Weldon, an economist and author, said: “Even if this were to stop tomorrow, the inflation numbers and growth numbers are going to look materially worse throughout 2026. “If this continues for longer… it’s an awful lot more challenging and you end up with a much tougher budget this autumn than the government would have been hoping to unveil.” DECISION TIME The U.K.’s economic plight presents an acute political headache for Starmer, as he faces a mismatch between his own party’s expectations about the government’s ability to help people and his own scarce resources. Energy Secretary Ed Miliband has promised to keep looking at different options for some form of assistance to bill-payers hit by an energy price shock. A pain point is looming in July, when a regulated cap on energy costs is due to expire and bills could jump significantly. One left-leaning Labour MP, granted anonymity to speak frankly, said: “They [ministers] need to be treating this like a financial crisis. They need plans for multiple scenarios with clear triggers for government support.” A second MP from the 2024 intake said “it’s right that a Labour government steps in, particularly to help the most vulnerable.” Foreign Secretary Yvette Cooper and Chancellor of the Exchequer Rachel Reeves at the first cabinet meeting of the new year at No. 10 Downing St. on Jan. 6, 2026 in London, England. | Pool photo by Richard Pohle via Getty Images This demand for action is being felt in the upper echelons of the party too, as Culture Secretary Lisa Nandy recently argued Reeves’ fiscal rules — seen as crucial in the Treasury to reassure the markets — may need to be reconsidered if prices continue to rise and a major support package is needed.  One Labour official said there are clear disagreements with Labour over how to go about drawing up help and warned “the fiscal approach is going to be a massive dividing line at any leadership election.” The same official pointed to recent comments by former Starmer deputy — and likely leadership contender — Angela Rayner about the OBR, with Rayner accusing the watchdog of ignoring the “social benefit” of government spending. Despite the pressure, ministers have so far restricted themselves to criticizing petrol retailers for alleged profiteering, and have been flirting with new powers for markets watchdog the Competition and Markets Authority. The government said Reeves would on Tuesday set out steps to “help protect working people from unfair price rises,” including a new “anti-profiteering framework” to “root out price gouging.” But Starmer signaled strongly in an appearance before a Commons committee Monday evening that he was not about to unveil any wide-ranging bailout package, telling MPs he was “acutely aware” of what it had cost when then-Prime Minister Liz Truss launched her own universal energy price guarantee in 2022.  O’Neill backed this approach, saying: “I don’t think they should do much… They can’t afford it anyhow. The nation can’t keep shielding people from external shocks.” Weldon predicted, however, that as the May elections approach and the energy cap deadline draws nearer, the pressure will prove too much and ministers could be forced to step in. The furlough scheme rolled out during the pandemic to project jobs and Truss’s 2022 intervention helped create “the expectation that the government should be helping households,” he said. “But it’s incredibly difficult. Britain’s growth has been blown off-course an awful lot in the last 15 years by these sorts of shocks.” Geoffrey Smith, Dan Bloom, Andrew McDonald and Sam Francis contributed to this report.

Listen on * Spotify * Apple Music * Amazon Music Nach 35 Jahren verliert die SPD ihre Bastion Rheinland-Pfalz. Gordon Schnieder führt die CDU zum Sieg, während Alexander Schweitzer trotz persönlicher Beliebtheit dem massiven Bundestrend unterliegt. Gemeinsam mit Rasmus Buchsteiner analysiert Gordon Repinski die Schockwellen für Berlin und die Bundespolitik. Im 200-Sekunden-Interview spricht der schleswig-holsteinische Ministerpräsident Daniel Günther (CDU) über den „Auftrag zur Beherztheit“. Günther ordnet ein, warum der Wahlsieg in Mainz kein Grund zum Ausruhen ist, sondern die Koalition in Berlin nun zwingt, die großen Sozial- und Rentenreformen durchzuziehen. Donald Trump verliert die Geduld: Angesichts der immer weiter steigenden Energiepreise in den USA hat der Präsident ein 48-Stunden-Ultimatum gestellt. Entweder das Regime gibt die Straße von Hormus frei, oder die USA bombardieren iranische Kraftwerke. Jonathan Martin berichtet aus Washington über die Frustration im Weißen Haus und warum dieses „Roulette“ für Trump zur Schicksalsfrage für die Midterm-Elections im November wird. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. ⁠Jetzt kostenlos abonnieren.⁠ Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: ⁠@gordon.repinski⁠ | X: ⁠@GordonRepinski⁠. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 ⁠information@axelspringer.de⁠ Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna **(Anzeige) Eine Nachricht der PKV: Hätten Sie’s gedacht? Vom jährlichen 15,5-Milliarden-Euro-Mehrumsatz der Privatversicherten profitiert das gesamte Gesundheitswesen. Denn neben den Haus- und Fachärzten kommen die höheren Honorare auch den zahnärztlichen Praxen zugute, dem Arzneimittelbereich oder Therapeutinnen. So stützt die PKV die medizinische Versorgung in Deutschland zugunsten aller – auch der gesetzlich Versicherten. Mehr auf pkv.de**

Ivo Daalder, a former U.S. ambassador to NATO, is a senior fellow at Harvard University’s Belfer Center and host of the weekly podcast “World Review with Ivo Daalder.” He writes POLITICO’s From Across the Pond column. Like many, I used to believe that former U.S. President George W. Bush’s decision to invade Iraq in 2003 was the biggest strategic mistake America had made, at least since the Vietnam War. That is, until now. U.S. President Donald Trump’s decision to join Israel in a war against Iran is a far bigger strategic error, and one with far bigger strategic consequences. The reasons for this are many, ranging from the immediate impact on the region and the global economy to the longer-term upshots for Russia and China, as well as the repercussions for U.S. alliances and America’s global standing. That much is already clear — and we’re only three weeks in. Let’s start with the similarities: Much like the Iraq War, the war against Iran began based on the presumption that the regime in power would swiftly fall and that a new, more moderate and less antagonistic one would take its place. In both instances, the idea was to remove the greatest destabilizing threat in the Middle East — Saddam Hussein’s regime in the initial case, the theocratic dictatorship in Tehran in the latter — through the swift and decisive use of military force. But while Bush understood that defeating a regime required ground forces, it seems Trump simply hoped that airpower alone would suffice. As a result, Hussein’s regime fell swiftly — though Bush did vastly underestimate what would be required to rebuild a stable, let alone a democratic, Iraq in its place. But the Iranian government, as U.S. intelligence officials themselves have testified, “appears to be intact” despite Israel killing many of its key political and security leaders through targeted strikes. Focusing on the region at large, Bush’s misjudgment eventually contributed to a large-scale insurgency, which strengthened Iran’s influence in Iraq and the wider Middle East. In contrast, Trump’s miscalculation has left in place a regime that, aside from assuring its own survival, is now singularly focused on inflicting as much damage on the U.S. and its allies as it possibly can. Iranian drones and missiles have already attacked Israel and the Gulf states, targeted critical energy production facilities and effectively closed the Strait of Hormuz, which hosts one-fifth of the world’s oil and gas export transits. The Salalah oil storage fire in Oman is pictured on March 13, 2026. | Gallo Images/Orbital Horizon/Copernicus Sentinel Data 2026 Less than a month in, the world is now witnessing the largest oil and gas disruption in history. And as the fighting escalates to include gas and oil production infrastructure, the global economic consequences will be felt by every single country for months, if not years, to come — even if the conflict were to end soon. The damage that has already been inflicted on the global economy is far greater than the economic consequences of the Iraq War in its entirety. But that’s not all. Geopolitically, the U.S.-Israel war with Iran will also have far greater reverberations than the war in Iraq ever did. For one, the Bush administration spent a lot of time and effort trying to get allies on board to participate in and support the war. It didn’t fully succeed in this, as key allies like Germany and France continued opposing the war. But it tried. Trump, by contrast, didn’t even try to get America’s most important allies on board. Not only that, he even failed to inform them of his decision. And yet, when Iran responded predictably by closing the Strait of Hormuz, the U.S. president then demanded allies send their navies to escort tankers — despite the U.S. Navy so far refusing to do so. And while it’s true that Iraq left many U.S. allies — even those that joined the war, like the U.K. — deeply scarred, Iran has convinced U.S. allies they can no longer rely on the U.S., and that Washington is now a real threat to their economic security. That, too, will have a lasting impact well beyond anything the war in Iraq did. Finally, the fact remains that when Bush decided to invade Iraq, Russia and China were still minor global powers. Russian President Vladimir Putin was only just starting his effort to stabilize the economy and rebuild Russia’s military power, while China had just joined the World Trade Organization and was still a decade or more away from becoming an economic superpower. In other words, America’s blunder in Iraq occurred at a time when the strategic consequences for the global balance of power were still manageable. Trump’s Iran debacle is occurring at a time when China is effectively competing with the U.S. for global power and influence, and Russia is engaged in the largest military action in Europe since the end of World War II. A woman sifts through the rubble in her house in Tehran, Iran on March 15, 2026 after it was damaged by missile attacks two days before. | Majid Saeedi/Getty Images Both stand to benefit greatly. Russia is the short-term winner here. Oil prices are rising, generating more than $150 million per day in extra income for Moscow to feed its war machine. The U.S. is relaxing its sanctions against Russia in a vain attempt to stall prices from ballooning at the pump. All the while, Ukraine is being left to contend with Russia’s missile and drone attacks without the advanced defensive weaponry that’s now being used to protect Israel and the Gulf instead. China, meanwhile, is watching as the U.S. diverts its military forces from the Indo-Pacific to the Middle East, where they will likely remain for months, if not years. These forces include a carrier strike group, a Terminal High Altitude Area Defense anti-missile system from Korea, and a Marine Expeditionary Force from Japan. And while a disruption in oil and gas supply will be a short-term problem for Beijing too, China’s rapid transition to renewables and close alignment with energy-rich Russia will leave it well placed to confidently confront the future. Bush and Trump both came to office determined to avoid the mistaken wars of their predecessors. Nevertheless, they both embarked on military adventures fed by a hubristic belief in American power. But while the U.S. was strong enough — and its adversaries still weak enough — to recoup much of the damage inflicted by Bush’s war, the war unfolding in Iran today will leave behind an America that will have lost much of its global power, standing and influence, destined to confront rising adversaries all on its own.

European countries are being advised to lower gas storage filling targets and to start refilling gas stores early, as the conflict in Middle East drives up global energy prices. European Energy Commissioner Dan Jørgensen urged in a letter to national energy ministers, seen by POLITICO, that countries should be flexible in how they refill gas stores, to “help reduce the gas demand at times where the supply is tense and ease the pressure on gas prices in Europe.” Since the U.S. and Israel launched strikes on Tehran in late February, the ensuing conflict has caused global energy prices to spike, driven in part by Israeli strikes on Iran’s vast offshore gas field and Tehran’s effective closure of the Strait of Hormuz, a critical passage that facilitates a significant share of the world’s oil and natural gas trade. In the letter, Jørgensen asked EU countries to lower their gas storage refilling targets to 80 percent, 10 percentage points below normal targets. He also suggested that countries could start storage injections early to avoid an “end-of-summer rush to refill storages,” which would put upward pressure on prices. He also suggested that governments extend the deadline to meet filling targets to as late as December, two months later than usual. He said countries can take these measures under the EU Gas Storage Regulation, which provides for flexibility in difficult market conditions. The EU requires member countries to maintain gas reserves at 90 percent of capacity by the winter — a measure brought in after Russia’s 2022 invasion of Ukraine. But this year’s colder-than-average winter depleted those reserves to an average of under 30 percent as of March, the lowest since 2022. Anxiety has been growing in Brussels over whether the conflict in Iran, coupled with already low gas reserves, could spark a fight among countries over dwindling global energy supplies. Jørgensen said that the EU’s gas supplies remain “relatively protected” since the bloc only has “limited reliance” on gas imports from the region. But as a “net importer” of gas globally, “high and volatile global prices may also impact the EU gas storage injections,” he said. As developments in Iran and the wider region are “are significantly impacting global oil and gas markets,” there are indications that it could take longer for Qatari gas production to return to pre-crisis levels, Jørgensen said. The commissioner said he would support countries to make use of the allowed flexibilities, which should be discussed with the European Commission and other member states before being implemented. A Commission spokesperson confirmed that the letter was sent to energy ministers.

U.S. sanctions on some Iranian oil will be temporarily lifted to allow the sale of shipments already in transit, Treasury Secretary Scott Bessent announced Friday. The partial pause on sanctions is intended to help ease what the Trump administration sees as a short-term shock to the global market as a result of the attack on Iran launched by the U.S. and Israel three weeks ago. Bessent said in a social media post that the U.S. is granting a short-term authorization to allow the sale of about 140 million barrels of Iranian oil in transit. “In essence, we will be using the Iranian barrels against Tehran to keep the price down as we continue Operation Epic Fury,” he said. Oil prices have spiked to more than $100 per barrel since the U.S. launched airstrikes on Iran last month, triggering a rise in gas prices. Israeli strikes on Iran’s vast offshore gas field and Iran’s closure of the Strait of Hormuz, a critical trade passage that facilitates a significant share of the world’s oil and natural gas trade, have helped drive the increases. The sales have been authorized for 30 days, according to a copy of the general license issued by the Treasury Department on Friday. The announcement marks a partial reversal of the longstanding aggressive economic pressure campaign by the U.S. intended to weaken Iran’s economy, though Bessent said the country would have “difficulty accessing any revenue generated” from the sales. “The United States will continue to maintain maximum pressure on Iran and its ability to access the international financial system,” he added. Trump appeared to acknowledge he was aware that entering a war with Iran could cause oil prices to spike, even as he touted the success of the U.S. military operation and the strength of the economy. “I expected it worse actually,” he told reporters at the White House on Friday. “I thought that oil prices would go much higher.” Bessent said he’s confident the suspension of sanctions on Iran will benefit the U.S. economy in the long run. “Any short-term disruption now will ultimately translate into longer-term economic gains for Americans — because there is no prosperity without security,” he said. Democratic Senator Jeanne Shaheen of New Hampshire, the ranking member on the Senate Foreign Relations Committee, said in response that the easing of sanctions gives the Iranian government “a financial lifeline” as Americans “continue to feel the impact” of the war. “To say the president has no plan is an understatement,” Shaheen said.

BRUSSELS — EU leaders were supposed to spend Thursday mapping out how to boost Europe’s economy. Instead, they were left scrambling to deal with two wars, a deepening transatlantic rift and a standoff over Ukraine. Twelve hours of talks, a few showdowns and many, many coffees later, here’s POLITICO’s rapid round-up of what we learned at the European Council. 1) Viktor Orbán’s not a man for moving … The most pressing question ahead of this summit was whether Hungary’s prime minister could be convinced to drop his veto to the EU’s €90 billion loan for Ukraine. He wasn’t. The European Commission had attempted to appease Orbán in the days running up to the summit by sending a mission of experts to Ukraine to inspect the damaged Druzhba pipeline, which supplies Russian oil to Hungary and Slovakia. Orbán has argued that Ukraine is deliberately not addressing the issue, and tied that to his blocking of the cash. Asked whether he saw any chance for progress on the loan going into the summit, Orbán’s response was simple: “No.” Twelve hours later, that answer was much the same. 2) … But he does like to stretch his legs. In one of the most striking images to have come out of Thursday’s summit, the Hungarian prime minister stands on the sidelines of the outer circle of the room while the rest of the leaders are in their usual spots listening to a virtual address from Ukrainian leader Volodymyr Zelenskyy. Ukraine’s President Volodymyr Zelenskyy (on screen) speaks to EU leaders via video at the European Council summit in Brussels, March 19, 2026. | Pool photo by Geert Vanden Wijngaert/OL / AFP via Getty Images The relationship between the two has descended into outright acrimony after the Hungarian leader refused to back the EU loan and the Ukrainian leader made veiled threats — which even drew the (rare) rebuke of the Commission. Faced with Zelenskyy’s address, the Hungarian decided to vote with his feet. 3) The new kid on the block is happy to be a part of this European family, dysfunctional as it may be. This was the first leaders’ summit for Rob Jetten, the Netherland’s newly-installed prime minister. Ahead of the meeting, he said he was “very much looking forward to being part of this family.” His verdict after the talks? That leaders differ greatly in their speaking style, with some quite efficient while others take longer to get to the point — but he welcomed the jokes of Belgian’s Bart De Wever, “especially when the meeting has been going on for hours.” 5) Though not everyone was so charitable. Broadly speaking, Orbán digging in his heels did not go down well. Sweden’s prime minister told reporters after the summit that leaders’ criticism of the Hungarian in the room was “very, very harsh,” and like nothing he’d ever heard at an EU summit. Jetten said the vibe in the room with EU leaders was “icy” at points, with “awkward silences.”  6) The EU’s not giving up on the loan. Despite murmurs ahead of the talks of a plan B in the works, multiple EU leaders as well as Costa and Commission chief Ursula von der Leyen were adamant that the loan was the only way to go — and that it will happen, eventually. “We will deliver one way or the other … Today, we have strengthened our resolve,” von der Leyen. Costa added: “Nobody can blackmail the European Council, no one can blackmail the European Union.” Top EU diplomat Kaja Kallas arrives at the European Council summit on March 19, 2026. | Pier Marco Tacca/Getty Images 7) Kaja Kallas wants to avoid a messy entanglement. In her address to the bloc’s leaders, Kallas, the EU’s top diplomat, stressed the importance of not getting caught up in the conflict in the Middle East. “Starting war is like a love affair — it’s easy to get in and difficult to get out,” she said, according to two diplomats briefed by leaders on the closed-door talks. At the same time, Kallas reiterated the importance of the EU’s defending its interests in the region but said there was little appetite for expanding the remit of its Aspides naval mission, currently operating in the Red Sea. 8) But it was all roses with the U.N. U.N. Secretary-General António Guterres joined the Council for lunch, thanking them for their “strong support for multilateralism and international law.” In an an exclusive interview with POLITICO on the sidelines of the summit, Guterres applauded the restraint shown by the Europeans, despite Donald Trump’s anger at their refusal to actively support the war or help reopen the Strait of Hormuz, a critical maritime artery that Iran has largely sealed off, driving up global energy prices. 9) Kinda. One senior EU official told POLITICO that the lunch meeting was “unnecessary.” “With all appreciation for multilateralism and its importance … considering the role the U.N. is not playing in international crises right now, it is unnecessary,” said the official, granted anonymity to speak freely. 10) Celery is a very versatile vegetable. Also on the table while they picked over the future of the multilateral world order was a pâté en croûte with spring vegetables and fillet of veal with celery three ways. Three ways! And for dessert? A mandarin tartlet with cinnamon. 11) Cyprus and Greece want the EU to get serious about mutual defense. Cypriot President Nikos Christodoulides and Greek Prime Minister Kyriakos Mitsotakis asked the EU to think about a roadmap for acting on the bloc’s mutual defense clause, according to two EU diplomats and one senior European government official. The clause, Article 42.7, is the EU’s equivalent of NATO’s Article 5. Its existence and potential use has recently come into focus since British bases in Cyprus were attacked by drones. 12) And the Commission hopes it’s already got serious enough about migration. Von der Leyen said that while the EU has not yet experienced an increase in migrants as a result of the conflict in Iran, the bloc should be prepared. “There is absolutely no appetite … to repeat the situation of 2015 in the event of large migration flows resulting from the conflict in the Middle East,” said one national official. The Commission chief emphasized that the mistakes of the 2015 refugee crisis won’t happen again. 13) Von der Leyen likes to cross her Ts.   Speaking of emphasis — “temporary, tailored and targeted” was how von der Leyen described the EU’s short-term actions to minimize the impact on Europe of the recent energy price spikes after the U.S.-Israeli strikes on Iran. The moves will impact four components that affect energy prices: energy costs, grid charges, taxes and levies and carbon pricing, she said. 14) The ETS is here to stay — with some modifications. While EU leaders agreed to make some adjustments to the Emissions Trading System — the bloc’s carbon market — most forcefully backed the continuation of the system itself. “This ETS is a great success. It has been in place for 20 years and is a market-based and technology-neutral system. So we are not calling the ETS into question,” German Chancellor Friedrich Merz told reporters after the talks had concluded. While the Commission will propose some adjustments to the ETS by July, these are merely adjustments, not fundamental changes, the German leader said. In the run-up to the summit, some EU countries, including Italy, floated the idea of weakening the ETS to help weather soaring energy prices. 15) No matter what, EU leaders want to get home — ASAP. While Costa has so far ensured every European Council under his watch lasts only one day instead of the once-customary two, this time around, that goal was looking optimistic. However, at the end of the day, leaders’ dogged determination to get out of there prevailed (even if that meant kicking a discussion on the long-term budget to April). À bientôt!

BRUSSELS — French President Emmanuel Macron said France was looking into ways of unblocking the Strait of Hormuz by acting at the United Nations level. “We have begun an exploratory process, and we will see in the coming days if it has a chance of succeeding,” Macron announced on Friday in response to a question from POLITICO after a meeting of EU leaders in Brussels. The French president said that he “explained to the U.N. Secretary-General [António Guterres] this afternoon that France intends to sound out its main partners, and in particular the members of the Security Council, on whether it would be appropriate to establish a U.N. framework for what we want to do in the Strait of Hormuz.” Macron said that he discussed that idea with Indian Prime Minister Narendra Modi during a call on Thursday morning and with Guterres, who on Thursday joined the European Council for lunch. Macron then informed other EU leaders. Guterres told leaders it was important for the Global South that any initiative on clearing the Strait of Hormuz go through the United Nations, according to one EU diplomat. Earlier in the day, a second diplomat told POLITICO that such an initiative could consist of a resolution that might win support from Gulf and European countries, creating a basis for a broader coalition to secure the vital waterway. Iran has largely sealed off the critical maritime artery that carries roughly 20 percent of the world’s oil supply, driving up global energy prices. Macron said he would test the chances of success of the U.N. initiative, without giving further details on the plan. “I think this is something that could help. I am prudent because it doesn’t only depend on us,” he said.

BRUSSELS — The European Commission will make a proposal to boost the bloc’s carbon market reserve within “days” and develop a €30 billion decarbonization fund, in response to pressure from EU leaders to limit the CO2 price’s impact on electricity bills. Commission President Ursula von der Leyen said the EU executive would work on a mix of immediate relief and structural changes to bring down high energy prices, with measures to tackle all components of the power bill, from taxes and levies to carbon costs. Two measures to tweak the Emissions Trading System (ETS), which requires factories and power plants to purchase a permit for every ton of CO2 they emit, “will come in the next days,” von der Leyen said at a press conference following Thursday’s EU leaders’ summit. They include an update to the so-called benchmarks that determine how many free-of-charge permits a certain industrial sector receives and a proposal to “increase the firepower” of the Market Stability Reserve governing the ETS permit supply. In what she described as the “medium term,” von der Leyen pointed to the review of the ETS scheduled for this summer, as well as a new “ETS investment booster” providing financial support to industry. This booster, first reported by POLITICO on Thursday, will “have a budget of round about €30 billion, financed by 400 million ETS allowances,” she said. “The aim is to finance projects for decarbonization” under a first-come, first-served scheme with a focus on lower-income EU countries. In their summit conclusions, leaders asked the Commission to conduct the ETS review “by July 2026 at the latest, to reduce the volatility of the carbon price and mitigate its impact on electricity prices … while preserving the essential role of the ETS.” Compared to previous drafts, the final conclusions also “invited” the Commission “to work closely with Member States to design national temporary and targeted measures” to rein in high energy prices. This addition was seen as catering to countries such as Italy and Poland, which had cited their national circumstances — in particular, high reliance on fossil fuels in their power mix — as reasons for more substantial changes to the ETS, two diplomats said. Asked specifically about a controversial Italian decree subsidizing power companies to make up for their ETS costs, von der Leyen said: “Because of different energy mix in different member states you cannot have one-size-fits-all” and vowed to “work closely with the Italian government on the Italian decree.” In general, she said, Thursday’s summit was “positive for the ETS.” The bloc’s bedrock climate measure escaped demands for fundamental changes from leaders and was widely praised as a key lever for accelerating the bloc’s transition to cheaper clean energy.

BRUSSELS — Europe’s insistence that it doesn’t face an energy supply crisis took a blow Thursday when Qatar warned it would have to scrap contracts with Italy and Belgium following a massive Iranian attack. QatarEnergy CEO Saad al-Kaabi told Reuters on Thursday it would have to cancel long-term liquefied natural gas supply contracts for up to five years after an Iranian ballistic missile knocked out a significant share of its production capacity in the Persian Gulf. The state-owned company, which produces a fifth of the world’s LNG, said the damage could impact deliveries to Italy, Belgium, South Korea and China. “These are long-term contracts that we have to declare force majeure,” al-Kaabi said. On Wednesday Iran bombed the Ras Laffan gas plant in Qatar. The ballistic missile attack, which followed an Israeli attack on Iran’s South Pars gas field, caused “sizeable fires and extensive further damage,” QatarEnergy said in a post on X. The strikes damaged two of Qatar’s 14 liquefied natural gas trains and one gas-to-liquids facility, QatarEnergy said Thursday. The outages will remove around 12.8 million tons of LNG annually from the market, roughly 17 percent of Qatar’s total export capacity and around 3 percent of global supply, for an estimated three to five years. The strikes mark a major escalation in regional tensions. Qatar’s LNG plant had already been offline following a previous drone strike, but the latest damage is expected to significantly prolong the disruption. Gas markets reacted sharply on Thursday, with European futures jumping as much as 35 percent to more than double pre-conflict levels, underscoring the risk of a prolonged supply shock. The outage leaves major buyers in Europe and Asia scrambling to replace lost volumes, raising concerns over energy security and the potential for sustained price pressure as competition for alternative LNG cargoes intensifies. NOTHING TO SEE HERE Earlier on Thursday German Energy Minister Katherina Reiche had downplayed the impact of the war, saying: “What we in Europe don’t have is a physical bottleneck.” She insisted the EU’s gas supplies are still flowing from Norway, the U.S., Kazakhstan and other countries. But Reiche said while she doesn’t believe the current situation is as serious as the 2022 shock following Russia’s invasion of Ukraine, “the current situation is also causing us concern,” and that it’s critical for Europe to continue to “monitor this crisis and make careful decisions.” Her comments came as EU leaders met for high-level talks in Brussels on Thursday, with energy one of the top issues. In 2022 Germany depended on Russia for more than half of its gas, but now relies on Norway and the Netherlands for the majority, importing some LNG from the U.S. It is not dependent on Qatari LNG. Other EU countries including Poland, Italy and Belgium depend on the Middle East country for a larger percentages of their LNG. Poland said Thursday its gas supplies “are secured,” adding Qatari LNG only accounts for 10 percent of the country’s total gas supply. “[T]his volume can be gradually supplemented with supplies from other sources, if necessary,” said Grzegorz Łaguna, a spokesperson for Poland’s Ministry of Energy. “Deliveries for March are being made, and there is currently no information indicating any significant risks to meeting current demand for natural gas, including the continued restrictions on supplies from Qatar,” he added. The U.K. government and regulators also played down fears of a supply shock. “The U.K. has very strong energy supplies from a diverse range of sources,” said Energy Minister Michael Shanks on Tuesday. But the country has just two days’ worth of gas supplies currently in storage, according to reports based on National Gas data. U.K. Green Party leader Zack Polanski has demanded the government freeze bills in July, when the cap is set to jump hundreds of pounds. Chancellor Rachel Reeves insists support should be “targeted” only at the poorest families, wanting to avoid a rerun of the eye-watering sums spent by the last government to protect all households and businesses after Russia’s invasion of Ukraine in 2022. India and China’s reliance on disrupted Middle East gas supplies has already caused price hikes and questions about European gas reserves.  “Geopolitics continue shaping gas and LNG markets, and despite the industry’s large scale, it lacks flexibility to absorb major disruptions, creating market volatility,” said Kristy Kramer, head of LNG strategy and market development at Wood Mackenzie. “How the industry responds to this event will vary, but we expect buyers to prioritise LNG supply security with a renewed focus on diversity.”