Portugal Joins EU Push for Windfall Tax on Energy Companies as Brent Tops $109

Portugal's Finance Minister Joaquim Miranda Sarmento has joined his counterparts from Germany, Spain, Italy and Austria in a joint letter to Brussels calling for a new EU-level windfall tax on energy companies — a direct response to oil prices breaching $109 per barrel following a fresh attack on an Iranian petrochemical facility and an escalating ultimatum from US President Donald Trump over the Strait of Hormuz.

The European Commission confirmed receipt of the letter on Monday and said it is "currently analysing it." A Commission spokesperson noted that the situation "differs from the 2022 energy crisis" while stressing that Brussels would "take into account the lessons from 2022, including the temporary solidarity contribution" — the windfall profits levy applied to fossil fuel companies following Russia's invasion of Ukraine.

What the Five Ministers Are Asking For

The joint proposal, modelled on the 2022 solidarity contribution, would impose a levy on energy company profits that exceed a defined baseline — effectively capturing the exceptional revenues that oil and gas companies are generating as the Iran conflict drives prices higher. The five finance ministers argue the measure would accomplish three things: fund temporary consumer relief measures, help contain inflation, and reduce the impact on national public accounts of energy subsidy programmes.

Portugal, Germany, Spain, Italy and Austria together represent a significant bloc within the EU's 27-member economic governance structure. Their coordinated action signals growing political impatience with energy price volatility and its asymmetric impact — consumers absorbing higher costs while energy companies report surging revenues.

In Portugal, the contradiction is visible on the stock exchange. Galp Energia, the country's dominant oil and gas company, closed Monday up 3.88%, having gained sharply in recent sessions as Brent crude climbed. EDP and EDP Renováveis also posted gains of 1.29% and 2.01% respectively, benefiting from the energy price environment despite their predominantly renewable profile.

Portugal's Specific Exposure

The timing is pointed for Lisbon. Despite Portugal's impressive renewables buildout — which has partially shielded the country from the worst of the Iran-driven energy shock — Portugal remains significantly exposed through its vehicle fuel market, industrial energy consumption, and the natural gas component of its energy mix.

As The Portugal Brief detailed in February, Portugal's exposure to Middle East energy disruption is more nuanced than raw import figures suggest, with LNG and pipeline diversification offering some insulation. But at $109 per barrel, the ISP fuel tax discount that the government has maintained since late 2025 is providing diminishing relief — and the budgetary cost of that discount is rising with every tick of the oil price.

The government had previously signalled willingness to consider structural measures if the conflict continued to push energy costs higher. The joint EU letter represents the first concrete policy proposal to emerge from that posture.

What Brussels Will and Will Not Do

The Commission's cautious response reflects genuine legal and political complexity. The 2022 solidarity contribution was introduced under emergency Article 122 of the Treaty — a provision that allows the Council to act without the European Parliament under exceptional circumstances. Replicating that mechanism requires member states to agree it is justified, and several northern European governments are reportedly uncomfortable with the precedent.

There is also the question of energy company investment. Galp and EDP have multi-billion-euro renewable energy investment programmes underway in Portugal. A windfall tax that captures current profits could, if poorly designed, reduce the capital available for the green transition investments that Portugal and the EU depend on to reduce long-term fossil fuel exposure.

For consumers and businesses in Portugal, the debate is not abstract. Fuel costs are the single most visible line item that has risen consistently since the Iran conflict intensified. Whether Brussels acts quickly enough to matter — and whether a windfall levy of the type proposed would actually reduce pump prices rather than simply relocating energy company profits — are questions the Commission will now need to answer.

The five-country letter represents a meaningful escalation of pressure. But with EU decision-making moving slowly even in the best of circumstances, any relief from that direction is unlikely before summer. In the meantime, Portugal's budget is already straining under the combined weight of energy costs and storm recovery, with the original 2026 fiscal projections rendered largely academic by events.