Global Fuel Crisis Looms, Several Countries Tinker with Tax Rules

The European Union is beginning to consider extraordinary measures to curb the surge in energy prices due to the Iran war, including the option of capping oil prices and imposing a windfall tax on energy companies’ profits. This discussion arises as the bloc’s finance ministers assess the risk of a new energy crisis that could repeat the turmoil of 2022.

Ahead of the ministerial meeting in Brussels, the European Commission is urging EU finance ministers to keep energy support policies short-term while staying on track with decarbonisation targets.

EU finance ministers are now considering oil price caps or taxes on large energy company profits as a coordinated response to rising energy costs.

The surge in natural gas and oil prices was triggered by the Iran war, raising concerns about a new crisis in the global energy market.

Analysts warn that further price increases could resemble the 2022 energy crisis. At that time, Russia’s invasion of Ukraine caused severe energy shortages in Europe. However, EU officials emphasise that the bloc is now better prepared, with higher domestic clean energy production and stronger infrastructure.

Nevertheless, uncertainty remains high due to the unpredictable duration of the conflict. Officials also note that the EU’s “fiscal manoeuvring room” is now more limited than before, particularly due to rising defence spending.

Although Europe has diversified its energy supplies since 2022, the region remains vulnerable to global shocks. Officials say Europe must prepare for new volatility, even if the situation does not develop into a full crisis.

Following the ministerial meeting in Brussels last weekend, EU Economic Commissioner Valdis Dombrovskis stated that the “scale, severity, and impact” of the war has increased over the past two weeks. He highlighted the closure of the Strait of Hormuz and attacks on energy infrastructure, which have driven Brent crude oil prices above US$100 per barrel and triggered fuel price spikes.

Eurogroup President Kyriakos Mihrakakis emphasised that the conflict’s duration is a key factor.

“The main issue is the duration and intensity of the crisis, as this will determine the scale of the energy shock. Our shared hope is de-escalation and avoiding major disruptions to energy infrastructure,” he said, as reported by Euronews.

European Stability Mechanism Managing Director Pierre Gramegna also warned of the conflict’s long-term impact. He said, “Even if this conflict ends tomorrow, its consequences will stay with us for a long time.”

The ministers discussed coordinated steps based on a European Commission note dated 26 March, which was also discussed with International Energy Agency (IEA) head Fatih Birol. Birol had previously warned of a potential energy crisis worse than the 1970s era.

While assessing the long-term impact of the Iran conflict, the Commission is urging member states to accelerate the transition to clean energy. Spain and Portugal are cited as examples due to their lower exposure to price volatility thanks to renewable energy use.

According to the note, renewables will account for about 48% of the EU’s electricity mix in 2025, up from 36% in 2021, driven by wind and solar power. In the same period, fossil fuels will decline from 34% to 26%.

In another part of the world, the Australian government has taken emergency steps to curb the surge in living costs due to global energy price rises. On Monday (30/3/2026), Canberra announced fuel tax cuts and a temporary waiver of road user charges for heavy vehicle operators for three months.

In a press conference in Canberra, Prime Minister Anthony Albanese stated that the government will halve the excise on petrol and diesel fuel. This policy is expected to lower fuel prices by 26.3 Australian cents per litre.

“We understand that the cost-of-living pressures on households are very real because the impact of the war in another part of the world is now being felt directly here,” Albanese said, as reported by Reuters.

Previously, tax cut policies have also been implemented by India and Vietnam.

Indian Finance Minister Nirmala Sitharaman said the government is cutting central excise duties on domestically used petrol and diesel. This policy is described as a direct response to the crisis in West Asia.

In addition, the government has set new export tariffs for diesel and aviation turbine fuel. Sitharaman announced export charges of 21.5 rupees per litre for diesel and 29.5 rupees per litre for aviation turbine fuel.

Meanwhile, Vietnam has officially temporarily eliminated environmental taxes on petroleum fuels to curb petrol price spikes.

Vietnam’s Ministry of Industry and Trade, in its official statement, explained that the environmental protection tax rates for petrol, diesel, and aviation fuel will be reduced to zero percent. This emergency policy takes effect from Friday until 15 April to dampen domestic economic volatility.

“This is considered an urgent and effective solution to stabilise the petroleum market and ensure national energy security amid escalating conflict in the Strait of Hormuz, which has created the biggest energy barrier ever,” the Ministry of Industry and Trade wrote in its official statement.

Data released by the ministry shows that the policy will lower petrol prices by around 26% and reduce diesel prices by just over 15%. This sharp decline comes after fuel costs skyrocketed at the start of this week due to tense geopolitical uncertainty.