In the face of soaring oil prices and the risks posed to global energy markets by the war in the Middle East, the Governing Board of the International Energy Agency has decided to launch a coordinated effort to bring to market some of the security stocks held by its member states. The initiative could mobilise up to 400 million barrels in order to stabilise oil markets and strengthen energy security.

Luxembourg announced its support for this international initiative on Wednesday evening. "Even though the security of supply of the national territory is not currently threatened, Luxembourg's support for the collective action led by the International Energy Agency demonstrates Luxembourg's commitment to solidarity with the international community," said the Minister for the Economy, SMEs, Energy and Tourism, (DP).

According to the government, no supply difficulties have been noted at this stage on national territory. However, the actual involvement of the Grand Duchy in the marketing of strategic stocks remains to be determined. "As part of the procedure provided for by the IEA and following discussions with European countries, the government will decide on the possible release of part of the Grand Duchy's security stocks, as well as the volumes involved," the Ministry of the Economy states.

A quarter of the world's oil

The IEA's coordinated action comes at a time of great uncertainty on world energy markets. Military tensions in the Middle East are fuelling fears of disruptions to oil flows, particularly at strategic crossings such as the Strait of Hormuz, through which a large proportion of the world's oil exports pass. Against this backdrop, the IEA's emergency mechanisms enable member countries to collectively mobilise their strategic reserves in order to mitigate supply shocks and limit price volatility.

For Lex Delles, this collective action must also be seen in the wider context of Europe's energy dependency. "The IEA's collective action contributes to controlling oil costs and guaranteeing security of supply, particularly in Asia", he stressed. The Minister added that the current situation "is a reminder of how vulnerable the European Union remains as long as it depends on imports of expensive fossil fuels that are exposed to geopolitical risks".

In Luxembourg, these tensions are also reigniting the political debate on fossil fuel dependency. In an open letter sent on 10 March to Prime Minister (CSV), déi Gréng believe that escalating tensions in the Middle East could lead to "higher energy and transport prices, additional inflationary pressure and an increased burden on households and businesses".

A structural dependency to be reduced

Ecologists believe that this situation illustrates the structural vulnerability of European economies to geopolitical crises as long as their dependence on fossil fuels persists. In a position paper entitled "Energy policy is also a security policy", the party points out that every international crisis risks turning into an energy and inflationary crisis if this dependence is not reduced.

In this context, déi Gréng are calling on the government to take both short-term and long-term action. In particular, the party is calling for the reintroduction of an energy tax credit targeted at low- and middle-income households and for support for businesses particularly exposed to energy costs in the event of a sharp rise in prices.

In the longer term, the Greens are calling for a national package to speed up the energy transition, including increased support for energy-efficient renovation of buildings, greater support for electric mobility and the development of zero-emission heating systems. The party also warns against any weakening of existing climate instruments, such as the EU ETS or carbon pricing.

A euro against the crisis, one euro to prepare

The document also highlights the potential role of the Luxembourg financial centre in financing the energy transition, particularly through green bonds and sustainable finance instruments.

For environmentalists, measures to cushion energy price rises must go hand in hand with structural investments. "Every euro spent today to cushion the energy crisis should be matched by a euro invested to avoid the next one", they argue.

Between managing the emergency on the oil markets and speeding up the energy transition, the crisis caused by tensions in the Middle East is thus putting the question of energy security and the resilience of the European economy to geopolitical shocks back at the centre of the Luxembourg debate.