Middle East tensions shake up the energy market, European officials gather in Boao to focus on energy security

Due to the current Middle East conflict, panic has spread across Europe, and Slovenia is no exception. Slovenian former President Tuerk told First Financial on the 25th during the Boao Asia Forum 2026 annual meeting.

Because of the price cap policy, gasoline prices in Slovenia are lower than in neighboring countries like Austria, leading residents to cross borders for refueling. Many border gas stations are lining up, and some have even temporarily run out of supplies. To curb cross-border fuel purchases and hoarding, the Slovenian government officially introduced fuel purchase restrictions last week, becoming the first EU member to implement such measures.

Under the new rules, Slovenian citizens can buy a maximum of 50 liters of fuel per day, while businesses and farmers are limited to 200 liters daily.

Tuerk was not surprised by this policy, as rising fuel prices are affecting daily commuting and agricultural activities in Slovenia.

“Slovenia is small and has dispersed settlements. People living in small towns or villages must drive to work, so rising fuel prices have a significant impact on local residents,” he told First Financial. “Additionally, it’s spring planting season now, with high demand for tractors and farming equipment. Farmers are very worried about whether there will be enough fuel for spring fieldwork.”

“The US and Israel’s military actions against Iran are a huge mistake. They caused oil prices to rise, which was entirely unnecessary and could have been avoided,” Tuerk said during a media group interview. “One of the urgent global needs now is to stop the war and do everything possible to stabilize the global oil market.”

On March 25th, former Slovenian President Tuerk was interviewed by the media at the Boao Asia Forum 2026 annual meeting. (Photo by Cheng Cheng / First Financial)

Multiple European countries are taking measures to address the energy crisis

Following recent easing of tensions in the Middle East, oil and gas prices have fallen somewhat. As of the reporter’s deadline, the benchmark Dutch TTF natural gas futures contract for the near month dropped 7.68% to €50.1 per megawatt-hour, still nearly 70% higher than levels during this round of Middle East conflict. Brent crude oil prices slightly declined over 1% to $94.76 per barrel but remain 30% higher than before the conflict.

Despite this, Europe still faces a severe energy situation.

According to CCTV News, earlier this month, QatarEnergy announced that due to drone attacks on two of its energy facilities by Iran, it would suspend liquefied natural gas (LNG) production. Qatar’s natural gas reserves are the third largest in the world, making it one of the most important natural gas producers globally.

Adding to the trouble, last week, the facility suffered “further extensive damage” during a ballistic missile attack. QatarEnergy CEO Saad Sherida al-Kaabi warned on the 19th that repairs could take three to five years, and that Belgium and Italy would be affected because the company could no longer fully meet its contractual production obligations. The volatility in natural gas supplies has put Europe, heavily dependent on natural gas-fired power, under a “triple squeeze” of high oil prices, high gas prices, and high electricity prices.

So far, the impact of energy price fluctuations has been reflected in economic data. The European Central Bank’s baseline forecast last week showed consumer price inflation of 2.6% this year. If energy supply disruptions continue, inflation could reach 6.3%, far above the medium-term target of 2%. According to initial data from S&P Global, the eurozone’s March composite PMI fell from 51.9 in February to 50.5, below analysts’ forecast of 51, and the lowest since May last year, but still just above the 50 mark that separates growth from contraction.

ECB President Christine Lagarde said on the 25th local time that if current energy costs continue to surge, it could trigger broader inflation, and the ECB will take decisive action. However, she noted that they are still assessing the impact of the Iran war.

Europe accelerates energy transition

Since the outbreak of the Russia-Ukraine conflict in 2022, energy transition has once again become a “collective consciousness” in Europe.

On the 23rd, IEA Executive Director Fatih Birol stated at a press conference: “I expect one of the measures to address this crisis will be to accelerate the development of renewable energy. This is not only because renewables help reduce emissions but also because they are a domestic energy source.”

Gonzalo Escribano, senior researcher on energy and climate at Madrid’s Elcano Royal Institute, also believes that after the conflict, countries’ views on renewable energy have “certainly” changed. “Renewable energy and related technologies are now widely seen as a tool for energy security, no longer just a way to address pollution and climate change, but as a geopolitical asset supported by pragmatic rather than idealistic considerations,” he told the media. “This is true even among governments and citizens indifferent to environmental issues.”

At this year’s forum, former Finnish Prime Minister Aho explained to First Financial why Europe’s reliance on a single energy source causes security anxiety.

“In the early 1970s, Finland imported 45% of its natural gas from neighboring countries. Although prices were reasonable and supply was secure, we still believed over-reliance on a single country’s energy exports was unwise. Germany took a different approach. Until 2010, Germany continued increasing its dependence on Russian natural gas. Before the Russia-Ukraine conflict, Germany’s reliance on Russian gas reached 27%. In contrast, as a neighboring country to Russia, Finland’s dependence was only 5%,” Aho said. “This vividly illustrates how dangerous over-reliance on a single energy source can be.”

On March 25th, former Finnish Prime Minister Aho was interviewed by the media at the Boao Asia Forum 2026. (Photo by Cheng Cheng / First Financial)

Currently, the UK has taken the lead. On the 24th, the UK government announced new regulations requiring all new homes in England to install heat pumps and solar panels. UK Energy Minister Grant Shapps stated that the Middle East conflict underscores the importance of developing clean energy for UK energy security, freeing the country from the uncontrollable fossil fuel markets.

Looking ahead to energy transition, Aho emphasized that predictability and flexibility are crucial. “Long-term investments like nuclear power require stable policy frameworks over decades, so governments must be able to create as stable a long-term regulatory environment as possible. Additionally, we need the capacity to adjust energy supplies in special circumstances, which was also on the agenda when the Finnish Prime Minister visited China earlier this year.”

He believes that Finland and China can learn from each other in power generation and efficient utilization. “Electricity will become an important part of the digital economy and future. I think strengthening cooperation with China in this field is essential.”

Notably, amid the urgent need for energy transition, the EU has simultaneously introduced the Industrial Accelerator Act (IAA), aiming to revive “European manufacturing.” Under the IAA, foreign companies investing in batteries, electric vehicles, photovoltaics, and critical raw materials must face restrictions such as mandatory technology transfer, foreign ownership limits, local content requirements, and local employment ratios. These restrictions specifically target investors from third countries with over 40% global capacity in these sectors. The law also explicitly prioritizes “EU manufacturing” in public procurement.

The Chinese Ministry of Commerce spokesperson responded that these measures constitute serious investment barriers and systemic discrimination, allegedly violating the Most Favored Nation principle, and further increase uncertainty for Chinese companies investing in the EU. China expressed serious concerns: “China will closely monitor the legislative process, carefully assess its impact on Chinese interests, and firmly safeguard the legitimate rights and interests of Chinese enterprises,” the spokesperson said.

As the Middle East situation drags on and energy and trade prospects face great uncertainty, Tuerk told First Financial that regarding the relationship between promoting domestic manufacturing and accelerating energy transition, “I believe this requires understanding from EU partners, because everyone must accept a reality: the EU needs not only the service sector and agriculture but also industrial production and manufacturing. Modernizing manufacturing to shape Europe’s future industrial landscape is a top priority.”

He cited the photovoltaic industry as an example, stating that China is a superpower in PV technology production and use, but Europe also has PV manufacturing technology. The key now is how China and the EU can define a common language in photovoltaics and negotiate solutions for integrating local capacities in Europe and China. “We need to negotiate more deeply and thoroughly on this shared need — ‘we’ refers to the EU and China,” he said.