EU Evaluates Energy Measures Amid Iran War

The European Union has stated that the impact of the Iran war on tourism is not severe enough to warrant emergency measures for airlines, such as waiving obligations to compensate passengers for flight cancellations. According to draft EU guidelines, high fuel prices do not count as an extraordinary circumstance that would allow airlines to avoid compensating passengers for cancelled flights.

European airlines have largely weathered the crisis so far, with hedges cushioning costs even as jet fuel prices have risen nearly 84% since the U.S.-Israeli war with Iran began on February 28. The EU guidelines emphasize that no jet fuel shortages have been reported in the European Union, and local fuel shortages could justify avoiding passenger compensation.

Meanwhile, European governments' blanket measures to shield households and businesses from high energy prices could significantly impact public finances if they grow. Federico Barriga-Salazar, Fitch Ratings' head of Western Europe sovereign ratings, noted that risks to the energy outlook mean some countries could potentially provide more support going forward.

Portugal's government is preparing a draft bill to impose a windfall tax on energy companies profiting from the energy price surge amid the Iran war. Finance Minister Joaquim Miranda Sarmento stated that Portugal would seek the highest possible level of coordination with other countries and learn from each other about potential measures being prepared.