Portugal Signals Structural Measures if Middle East Conflict Continues to Drive Up Energy Costs
Portugal's government has signaled it is preparing for the possibility that the Middle East conflict, and its devastating effect on global energy prices, could persist far longer than initially hoped. Foreign Minister Paulo Rangel told journalists...
Portugal's government has signaled it is preparing for the possibility that the Middle East conflict, and its devastating effect on global energy prices, could persist far longer than initially hoped. Foreign Minister Paulo Rangel told journalists on Monday that the country may need to move beyond the temporary mitigation packages adopted in recent weeks and implement more far-reaching structural measures.
"If there is a fairly quick resolution to the conflict, I think we can easily accommodate the negative impact of these weeks and return to a kind of normalization," Rangel said at a joint press conference in Lisbon with his Icelandic counterpart, Porgerdur Katrin Gunnarsdottir. "If that is not the case, naturally we will have to take some more concrete structural measures to relieve the burden on businesses and families."
A Crisis That Touches Everything
The minister described the situation in the region as "very worrying" and said the government is reviewing developments "very, very carefully — daily, sometimes twice a day" to determine the best policy response. The escalation between the United States, Israel, and Iran that began on 28 February has disrupted roughly 20 percent of global oil supplies flowing through the Strait of Hormuz, which Iran has effectively blockaded.
Brent crude has risen more than 50 percent since the conflict began, topping 110 dollars per barrel. Natural gas prices in Europe have surged around 85 percent. In Portugal, diesel prices have climbed by approximately 17.5 percent in less than a month, and the government has already introduced a temporary reduction in fuel taxes worth 3.55 cents per litre on diesel.
Rangel acknowledged that the price shock extends well beyond the petrol pump. "The increase in oil prices has an enormous impact not only on transport, but on the entire chain of production and distribution," he said, adding that the conflict is also disrupting fertilizer supplies that transit the Strait of Hormuz — a particular concern for Portugal's farming sector, already reeling from nearly 500 million euros in storm losses.
Where Portugal Stands in Europe
Portugal's response so far has been more modest than that of some European peers. Spain approved a five-billion-euro crisis package that cut VAT on energy from 21 to 10 percent, reducing petrol and diesel prices by approximately 30 cents per litre. Germany is exploring legislation to limit how frequently petrol stations can raise prices. Italy is considering redistributing windfall VAT revenues back to consumers.
Rangel's comments suggest Portugal is watching these approaches closely. The government's stated goal is to ensure that "especially growth and investment are not as affected as would be the case without any government intervention." What form structural measures might take — whether broader tax cuts, direct subsidies, or sector-specific support — remains to be defined.
The government has already activated its energy crisis framework, and natural gas prices are now around 85 percent above pre-conflict levels, according to the Ministry of Environment and Energy.
A Diplomatic Dimension
Rangel's remarks came during a visit by Iceland's foreign minister, who noted that while Iceland is energy self-sufficient thanks to hydroelectric and geothermal resources, its small currency is already feeling inflationary pressure. Gunnarsdottir described the Iranian regime as "terrorist" and emphasized the importance of rules-based international order.
For Portugal, the Middle East crisis sits at the intersection of foreign policy and domestic economics. The country recently convened its first Defense Council under the new president, and the conflict's fallout has already prompted emergency measures on fuel prices and raised questions about whether Portugal should formally declare an energy emergency.
The coming weeks will reveal whether the government's temporary measures are enough — or whether, as Rangel hinted, deeper intervention becomes unavoidable.
