Europe is bracing for another punishing surge in energy bills as two wars—one in Iran now entering its eighth month and Russia’s continuing invasion of Ukraine—tighten global fuel supplies and rattle markets.
Restrictions remain in place on the Strait of Hormuz, a critical artery for world energy flows that carries about 20% of global oil and gas exports.
As supplies pinch, energy and fuel costs have jumped worldwide, squeezing companies and household budgets alike.
More expensive oil and gas are also feeding consumer inflation and driving up governments’ borrowing costs.
The upheaval is straining transatlantic ties as well. This week, President Donald Trump threatened to ban US diesel exports in a push to lower prices at the pump ahead of the November midterms.
Across Europe, elevated energy costs are biting voters and, according to recent research, are helping to lift support for populist and far-right parties.
With EU energy ministers wrestling with the issue at a meeting in Dublin this week, and next week’s budget approaching, RTÉ’s Europe Editor Tony Connelly examines how Europe arrived at this moment—and the options governments have as they try to ease pressure on households.
Fighting in Iran and the war in Ukraine are rippling through global oil and gas markets, raising living costs and adding fuel to an already tense political climate in both Europe and the United States.
Speaking to the FT ahead of this week’s informal gathering of EU energy ministers in Dublin, Energy Commissioner Dan Jørgensen warned that 50 million Europeans could be forced to choose between heating and food this winter.
“We have millions of citizens who basically, at the end of the month, will have to choose between freezing or being hungry because they cannot pay the bills,” he said.
Across the EU, residential electricity prices averaged 34% higher in the first half of 2025 than in 2019. Looking ahead, wholesale prices in the second half of 2026 could rise 25% year-on-year.
In Ireland, Electric Ireland raised residential electricity prices by 8% and gas by 7.7% in July—the first increases since the period immediately after Russia launched its invasion of Ukraine.
What is driving the increase in prices?
Roughly 20 million barrels of oil a day—about one fifth of global consumption—and 20% of LNG exports from Qatar and the United Arab Emirates (UAE) typically move through the Strait of Hormuz.
After the US and Israel attacked Iran on 28 February, shipping through the waterway slowed to a near standstill.
Oil prices promptly jumped by 8%, while the European gas price climbed 20%.
Europe may not rely on the Gulf for most of its gas, but buyers still found themselves bidding against Chinese, Indian and Japanese traders as the LNG market tightened.
At the same time, Europe has not been filling storage as aggressively as critics argue is needed.
The European Union has received criticism for not stockpiling more gas for winter
Gas storage stood at 46 billion cubic metres (bcm) in February, down from 60 bcm in 2025.
Should a cold snap arrive this winter, European wholesale buyers may have to pay a premium to secure additional supplies.
Europe also remains highly dependent on the Gulf for refined petroleum products, including jet oil.
The EU’s power system has had some protection from the rise in renewables, which now generate 35% of electricity across the main markets, up from 24% just before Russia’s invasion.
Even so, volatile gas prices can still feed through into electricity bills, and a worldwide shortage of diesel is weighing on major parts of the economy—especially agriculture.
Why are electricity prices so much higher in Ireland?
In the second half of 2025, Ireland recorded the highest electricity prices in the EU, with consumers paying €0.40 per kWh—about 40% above the EU average.
Several structural factors are driving that premium: Ireland’s distance from continental power grids, a heavier dependence on fossil fuels (after years of growth powered by relatively cheap gas-fired energy), a dispersed population, and an expensive grid system.
Because gas is required at the final stage of electricity generation, countries that lean too heavily on gas can see energy costs rise out of proportion when gas prices swing.
Since the Iran war began, gas prices have lurched sharply. They initially surged 75% as LNG output in Qatar came to a halt.
European LNG prices have risen 70% since July to €73 per megawatt hour (MWh), above the typical €30-€60 per MWh range.
Why is diesel suddenly to the forefront?
Diesel has become a political flashpoint because so much of the modern economy—from cars and farm machinery to industry, shipping and heavy equipment—relies on it, and it delivers more energy than other oil products.
Supply chains, refinery operations and shipping routes have been disrupted by the Gulf conflict and the war in Ukraine, affecting about one third of the global diesel market; when supply tightens, prices rise.
Under normal conditions, the Middle East supplies 19% of global diesel, the US 15% and Russia 11%.
A further release of diesel and oil could be possible depending on an upcoming meeting of the IEA
By August, diesel shipments from the Gulf had fallen to around one quarter of pre-war levels, while Russia’s diesel exports were down by one fifth.
The squeeze has become a pressing problem for President Donald Trump and the Republican Party ahead of the November midterms.
Diesel prices hit a record $6.52 a gallon last week, roughly 70% higher than pre-war levels.
In the EU, average diesel prices rose to €2.24 a litre, compared with a pre-war average of €1.59.
What has the Trump administration been doing to cool prices?
Mr Trump has spent weeks criticising Ukraine for striking Russian refineries, though the International Energy Agency (IEA) says the sharper shock has come from the Iran war.
After meeting Ukraine’s President Volodymyr Zelensky in New York, Mr Trump floated a 90-day ban on US diesel exports as a possible way to bring down fuel prices.
On Thursday, he tied that threat to a demand that France and Germany release 120 million barrels of diesel from strategic reserves.
In March, soon after the US-Israel strike on Iran, the IEA coordinated the largest strategic oil release ever—400 million barrels.
Watch: IEA Chief Fataih Birol speaks to RTÉ’s Six One News on rising fuel prices
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Officials in the US administration have complained that France and Germany had pledged to release some stock under the March agreement but had been slow to follow through.
On Tuesday, Ireland’s Minister for Climate, Energy and the Environment Darragh O’Brien said that conversations with contacts in New York and Washington the previous week suggested the Trump administration was moving away from an export ban, adding: “We’re not being complacent.”
What impact would a 90-day ban on US diesel exports have had?
Even in the US, there were fears an export ban would backfire.
Without exports, diesel would need to be stored—and the US would lack sufficient storage capacity if a ban lasted the full 90 days.
That, in turn, could force refiners to cut diesel output, disrupting the production of other refinery products such as gasoline.
In addition, some US manufacturers import diesel, which could leave them paying higher prices on world markets.
Analysts suggested Mr Trump likely would not have kept a ban in place for the entire three months, and might instead have lifted it after early November’s midterm elections.
Rising energy prices has been cited as an issue for Donald Trump and the Republican party
For Europe, a US diesel export ban would have landed as another blow, potentially driving already high prices even higher.
The EU has sharply reduced purchases of Russian oil products, which has led to a significant rise in imports of US diesel.
Last year, the EU imported 180,000 barrels a day of US diesel—nearly one third of all diesel imports.
“We fully reject any ban on diesel,” European Commission spokesperson Anna-Kaisa Itkonen said yesterday morning.
“A ban would not be beneficial to anyone. It would undermine our trust in the United States as a reliable partner,” she added.
What are the political implications for Europe?
French President Emmanuel Macron warned that a US export ban would be “catastrophic”, arguing that high energy prices—piling onto an already severe cost-of-living crisis—are seen as boosting far-right parties across Europe.
Far- and hard-right parties are expected to make major gains next year in France, Spain, Italy and Poland.
Research from Germany’s CESifo, published in July, found that after Russia’s invasion of Ukraine, households that faced above-average energy price increases were 7.5% more likely to vote for the far-right AfD.
How seriously did the EU take the US threat?
Diplomatic engagement intensified after EU energy ministers gathered in Dublin on Tuesday.
Following Mr Trump’s warning aimed at France and Germany, the French government on Thursday urged the European Commission to organise a conference call with Irish officials (as Ireland holds the EU Presidency) and counterparts in the UK, Germany and Italy.
The EU’s Energy Union Task Force met in emergency session yesterday morning, bringing together officials from every member state to coordinate a political response to the US threat.
Reports said France recommended a Europe-wide release of 50 million barrels of diesel from strategic reserves, along with another 50 million barrels released globally under a coordinated IEA framework.
Around midday, the European Commission confirmed the task force had met but did not confirm the numbers, stressing that any stock release is an IEA decision, while the Commission would coordinate EU participation in any strategic drawdown.
By late yesterday morning, the Irish presidency convened a further emergency meeting of EU ambassadors, and in Paris the Elysée Palace said Mr Macron would hold a video call with G7 leaders—including Mr Trump.
French President Emmanuel Macron said the release of diesel and oil would be ‘frontloaded’
Not long after, Mr Trump posted on Truth Social: “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil.
“The process will begin immediately. Thank you for your attention to this matter! President DJT.”
A G7 statement confirmed the move moments later.
G7 countries agreed to release 100 million barrels of crude oil and diesel over the next four months, including a frontloaded tranche in the coming 20 days—widely seen as a timeline that aligns with Mr Trump’s electoral pressures.
Leaders also pledged to coordinate refinery maintenance to avoid overlapping shutdowns, and urged other countries with spare capacity to refine additional crude into diesel where possible.
Still, the statement indicated that some of the release reflected commitments already made by G7 members through the IEA in March.
It also did not specify how much of the total would be crude versus diesel.
Markets reacted quickly. European diesel futures fell, with the benchmark down 8% to $1337.75 per tonne—the lowest since the start of September—while wholesale diesel prices in New York harbour slid nearly 5% to $4.43 a gallon.
Last night, Mr Trump told reporters there would be no US export ban and said one “was never really on the table”.
“But what Europe did was a great thing,” he added.
Whether the steps will be enough to reshape the midterm outlook for Mr Trump and Republicans remains uncertain.
What more can governments do?
Officials will be watching closely for signs that the coordinated release translates into sustained relief at the pump.
Over the longer term, the EU’s stated goal remains expanding renewables and reducing reliance on imported fossil fuels.
For now, Europe still depends heavily on imported oil, with a growing focus on importing refined products because European refining capacity—including diesel—has fallen, according to the Bruegel think tank.
Diesel imports have increased 25-fold since 1990.
Another central objective is to accelerate electrification across the bloc.
“Clean electricity generated in Europe will allow Europe to reduce its dangerous dependency on geopolitically volatile and expensive imported fossil fuels,” Bruegel deputy director Simone Tagliapietra told EU energy ministers in Dublin.
He added: “It will also unlock new industrial opportunities, especially related to the manufacturing of those clean technologies for which Europe has comparative advantages.”
Cross-border interconnectors form part of the EU’s plan diversify energy supply
However, deeper electrification will require much closer coordination among member states, including grid harmonisation and building more cross-border interconnectors.
Critics say electricity policy is drifting back toward national control as countries pursue their own subsidy schemes and capacity mechanisms.
“Clarity on needs and reduction of regulatory risks will lower capital costs. This can drastically cut the cost of the capital-intensive system that we want to build to electrify our economies,” Mr Tagliapietra told ministers.
During its EU presidency, the Irish Government hopes to advance the so-called ‘Grids Package’, a major legislative push.
The plan aims to upgrade 11 million kilometres of electricity networks across Europe to better balance supply and demand, expand storage, strengthen interconnectors and equip grids to manage—and share—the growing volumes of wind and solar power intended to displace imported fossil fuels.
Those challenges are expected to dominate meetings under the Irish presidency, including a key summit in Brussels on 15 October.
