Rising oil prices threaten the recovery of Germany’s economy, the “engine” of the European Union

How much will the Iran war make oil, gasoline and diesel more expensive? There is growing concern that the price shock could dash hopes for an economic recovery in Germany, according to Deutsche Welle.

“The most important news is, first of all: Germany’s energy supply is secure,” German Economy Minister Katherina Reiche said on Wednesday. Although prices have risen sharply by around 30 percent in the wake of the US-Israeli war with Iran, there is enough oil available, she insisted, and there is no reason to worry about Germany’s gas supply.

“Our dependence on the Gulf region for gas is very low, accounting for less than 4 percent of the EU’s total consumption,” Reiche added.

The German government’s top priority in recent days has been ensuring stability.

He reacted immediately after the International Energy Agency (IEA) called on member states to release 400 million barrels of their national oil reserves to stabilize oil prices. The largest release from the reserve in the history of the IEA. The IEA requires its 32 member states to maintain reserves equivalent to the average volume of oil imports over 90 days.

According to the Ministry of Economic Affairs and Energy, Germany holds 19.5 million tons (143 million barrels) of crude oil in secret storage sites. Most of it is underground, in large caverns, but some reserves are also located above ground, in tanks.

Germany plans to release 2.4 million barrels of this reserve. In addition, the German government plans to restrict price increases at gas stations.

Gasoline and diesel prices are currently well over 2 euros ($2.3) per liter, and each day the price rises and falls considerably at individual gas stations. Now, to ease the burden on commuters and companies, Reiche wants to follow Austria’s example and allow gas stations to raise prices only once a day. Price cuts would be allowed at any time, however.

The German government is also considering tightening antitrust law and giving the Federal Cartel Office, which monitors price fixing and price increases, greater intervention powers.

Around 100 million barrels of oil are produced worldwide every day. A fifth of this is transported through the Persian Gulf. But since the US and Israeli attack, Iran has blocked ships from passing through the Strait of Hormuz.

Using oil reserves in this situation is “sensible, but not a panacea,” said economist Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin. According to his calculations, the 400 million barrels now released could offset the blockade for just under three weeks. But if the conflict escalates further and the strait remains closed, the oil reserves would be no more than “a drop in the ocean.”

Since Russia’s invasion of Ukraine, Germany has cut off its supplies of Russian gas, which has led to rising energy prices. They are now far too high, according to the business community, which now sees itself at a significant disadvantage in international competition.

Industrial production in Germany is steadily declining, and companies are increasingly shifting their investments to other countries.

When the new federal government led by Chancellor Friedrich Merz took office 10 months ago, it said its top priority would be an economic revival. But a real recovery has yet to materialize. In addition to high energy prices, companies complain about excessive bureaucracy and regulation.

US President Donald Trump’s unpredictable tariff policy has weighed on Germany’s traditionally strong export sector.