EU eyes price capping to control rising gas costs

The European Union is considering measures such as subsidising or capping natural gas prices in an effort to curb rising energy costs linked to the ongoing war involving Iran.

European Commission spokesperson Anna-Kaisa Itkonen confirmed that the EU is prepared to take all necessary steps to address soaring prices, in coordination with members of the International Energy Agency, Caliber.Az reports via Al Jazeera.

Earlier in the day, European Commission President Ursula von der Leyen said the EU was examining several options to reduce the influence of gas prices on electricity costs across the bloc.

Speaking to lawmakers in Strasbourg, she said it was "crucial" to reduce the cost impact when gas determines the electricity price. Von der Leyen outlined possible solutions, including improved use of Purchase Power Agreements and contracts for difference, additional state aid measures, and exploring the option of subsidising or capping gas prices.

The surge in energy costs follows developments in the Middle East, where Iranian authorities have effectively closed the Strait of Hormuz in response to ongoing strikes by the United States and Israel on Iranian territory.

The narrow shipping corridor between Iran and Oman normally handles around one-fifth of the world’s daily oil and liquefied natural gas (LNG) shipments. Its disruption in recent days has pushed global commodity prices sharply higher.

By Nazrin Sadigova