Europe Burns Reserves As Oil Hits $97

Oil is at $97 a barrel. Eurozone inflation is at its highest point since September 2023. Strategic petroleum reserves are being run down towards their legal floor. Three months into the Iran-US war’s squeeze on the Strait of Hormuz, the route for roughly a fifth of global oil, European governments are spending billions to soften the impact on households and business. The EU has no seat at the negotiation that would actually end the crisis.

Who Pays, and How

The cost is landing unevenly, and each capital is reaching for its own instrument. Poland cut fuel VAT to 8%, keeping price rises to 8.8% year-on-year against an EU average of 20.8%. France chose targeted help for truckers, farmers and low-income commuters, with €130 million already spent and a projected €4–6 billion total cost. Germany and Italy went for broader relief: Berlin cut fuel taxes in a package worth €1.6 billion, while Rome estimates that the average family is paying hundreds of euro more a year for fuel, electricity, food and plastics.

For Maltese readers, this is not a distant energy story. An island economy feels oil prices through shipping, aviation, groceries, construction costs and the trip to work. What Europe is doing now is not a common energy policy, but national spending against a shared supply shock.

In March, the International Energy Agency coordinated its largest ever release: 400 million barrels across 32 countries, with EU states contributing roughly 92 million. By early May, only 164 million barrels had reached the market. The IEA warns that, at current draw rates, inventories could hit critical levels before peak summer demand. EU law requires member states to hold 90 days of net imports in reserve. Several could breach that threshold within weeks.

The Ad-Hoc Naval Push

European navies are moving, but slowly and outside NATO command. France has positioned the carrier Charles de Gaulle in the Arabian Sea with roughly 20 Rafale fighters. Germany is sending the minesweeper Fulda through Suez, arriving in two to three weeks. Italy plans four vessels. According to vz.lt, Lithuania’s parliament voted 78 to 7 to authorise up to 40 troops for minesweeping. The framework is a Franco-British ad hoc coalition, not an EU or NATO operation.

The EU does have a naval mission of its own, Operation ASPIDES, launched in 2024 to protect shipping in the Red Sea. EU foreign policy chief Kaja Kallas has floated extending it to Hormuz, saying the mandate already allows this with a change to the operational plan. Mine clearance would be a different matter. It would require a formal Council decision, meaning unanimous agreement among all 27 governments. Iran has warned Europe against sending warships to the strait at all.

Pakistan Mediates, Europe Pays

Kallas put the problem plainly at the May Foreign Affairs Council, the monthly meeting of EU foreign ministers: "This is between the US and Iran, and they do not really take in any kind of mediation. We do not have much leverage over both of them."

Pakistan, not France, Germany or the UK, the European parties to the 2015 Iran nuclear deal, is doing the mediation. The April ceasefire brokered by Pakistan has weakened into what Trump called shooting "in a more moderate manner." On June 6, the US struck Iranian radar on Qeshm Island; Iran fired seven ballistic missiles at US bases in Kuwait and Bahrain. Hours later, Trump told reporters things were "improving."

The energy shock is also weakening climate commitments. Germany, France, Estonia and Spain pressed the Commission to ease carbon-market pressure on heavy industry, demanding longer transition periods for free emissions allowances under the Emissions Trading System, the EU’s cap-and-trade mechanism for carbon. The Commission’s ETS revision lands on July 15. Energy-intensive industries now have their strongest case in years for slower decarbonisation.

Europe is carrying the economic weight of the Hormuz blockade. The one decision that determines when the pressure eases, a deal between Washington and Tehran, remains outside European control.