EU leaders rally around multilateralism as Hormuz closure drives energy prices higher

European leaders gathered in Brussels on Thursday for a summit that was meant to focus on competitiveness and the continent's deepening deindustrialisation. Instead, they spent the day grappling with the fallout from a widening war in the Middle East, a shuttered Strait of Hormuz, and a Hungarian veto that threatens to cut off financial lifelines to Ukraine. The meeting, the latest in a string of European Councils dominated by events in Washington, laid bare the EU's struggle to act strategically while reacting to crises it did not choose.

Energy shock rewrites the agenda

The immediate trigger for the agenda shift was the closure of the Strait of Hormuz, which sent wholesale electricity and gas prices climbing across the continent within days. Unlike the 2022 crisis, when a genuine supply shortfall drove natural gas to record highs, European officials stress that physical gas availability is not the problem this time. Prices for the commodity itself remain well below the peaks seen after Russia's full-scale invasion of Ukraine. The current spike, they argue, is driven by financial markets pricing in geopolitical risk and by the structure of electricity markets that tie power costs to marginal gas-fired generation.

Dan Jorgensen, the European Commissioner for Energy, told a group of European media outlets on Wednesday that the Commission would push for lower taxes on electricity generation and a measured relaxation of the emissions trading system. "Energy taxes, in many Member States, can be more rational," he said. "And it's one of the things we can do in the short term. Tomorrow, if there is the will in a Member State." The Commission's approach stops short of the deeper ETS reforms demanded by Rome and Berlin, reflecting a determination not to undermine the long-term decarbonisation logic that makes renewables the only energy source immune to geopolitical blackmail.

Several member states had arrived in Brussels calling for emergency subsidies for energy-intensive industries and a suspension of carbon costs. The Commission's counter-proposal, targeted tax reductions and limited ETS flexibility, aims to keep the Green Deal's architecture intact while acknowledging political pressure. Diplomats describe the package as a holding operation: enough to calm markets for now, but reliant on national governments to implement tax cuts that many have resisted for years on fiscal grounds.

Multilateralism as the only consensus

If energy dominated the morning, the afternoon belonged to a debate over what the EU stands for in a world where the United States under Donald Trump has abandoned the rules-based order it once built. The draft conclusions, seen by this publication, commit the 27 to "respecting the Charter of the United Nations and the norms and principles it enshrines, in particular those of sovereignty and territorial integrity, political independence and self-determination." The language is deliberate. It does not name the United States or Israel. It does not condemn the unilateral strikes on Iran. But by anchoring the EU's position in the UN Charter, it draws a line that the White House has effectively erased.

The symbolism was reinforced by a working lunch with António Guterres, the UN Secretary-General, scheduled before the Iran escalation but now freighted with new meaning. Diplomatic sources from multiple capitals described the meeting as a "strong signal of support for the rule of law and multilateralism." For an institution that operates by consensus, the signal is the substance. As one diplomat put it: "What's in the conclusions is the point of consensus; there wasn't consensus to go further."

Von der Leyen's gaffe and the scramble to recover

The summit took place under a cloud created by Ursula von der Leyen herself. In a speech last week, the Commission president appeared to certify the death of the rules-based international order, or at least its applicability to Europe. The remark forced a hasty clarification and handed critics ammunition. By Thursday, the Council conclusions had been drafted to contradict her implicitly, reaffirming the very framework she seemed to have discarded. The episode exposed the fragility of the Commission's leadership when the member states disagree on the diagnosis, let alone the cure.

Some leaders privately welcomed the correction. Others noted that von der Leyen's slip reflected a genuine strategic anxiety: if the United States no longer guarantees the security architecture Europe has relied on for seventy years, the EU's instinctive multilateralism may be a comfort blanket rather than a strategy. The conclusions paper over that tension. They do not resolve it.

Orbán's leverage and the Ukraine loan

While leaders debated principles, a concrete lever of pressure remained unresolved. Viktor Orbán has for months blocked a multi-billion euro loan to Ukraine, part of a G7-backed package that requires EU participation. The Hungarian prime minister had previously signalled he would lift the veto. He has not. With the US-Israeli war now dominating headlines, Ukrainian officials fear the conflict in the Middle East will accelerate the political fatigue that Orbán exploits. "As if nothing had been learned from the large-scale invasion about Russian blackmail at the expense of its oil and gas," one diplomatic source said, describing the risk that some capitals might again look to Moscow for energy deals if the Hormuz crisis persists.

The loan is not on the formal agenda for decision on Thursday, but it shadows every conversation about unity. Germany, France and the Commission have all pressed Budapest in recent weeks. Orbán's calculation is simple: the more crises the EU faces, the higher the price for his cooperation. The summit will test whether the 26 can devise a mechanism that bypasses him without fracturing the unanimity rule that gives him the veto in the first place.

Divisions mapped by capital

The consensus language in the conclusions masks a spectrum of positions that has widened since the Gaza war. At one end, Spain maintains a firm "no to war" stance, criticising both the Israeli campaign in Lebanon and the US-Iran escalation. At the other, several central and eastern European capitals treat any criticism of Washington or Jerusalem as taboo, viewing the transatlantic bond as existential. Germany occupies a shifting middle: initially reluctant to lecture allies, Berlin hardened its public line this week to declare "this is not Europe's war," a formulation that distances the EU without breaking ranks with the United States.

These fractures are not new. They paralysed the EU's response to Gaza. They resurfaced over Lebanon. Now they shape the Iran response. The conclusions reflect the lowest common denominator, a commitment to the UN Charter that everyone can sign because it demands nothing specific. As one diplomat acknowledged: "These conclusions represent a point of consensus regarding the current situation, and that's all there is to it."

The long-term energy logic

Beneath the crisis management runs a structural argument the Commission is keen to keep alive. Renewables rely on an inexhaustible raw material, wind and sun, that is not subject to geopolitical fluctuations. Gas and oil are located in what officials privately call "geostrategic powder kegs." The 2022 crisis accelerated Europe's clean energy deployment; the current one could either reinforce that trajectory or trigger a relapse into fossil fuel dependency if governments panic. The Commission's insistence on not distracting from the long-term objective is as much a political signal as an economic one.

Yet the politics are treacherous. Energy-intensive industries in Germany, Italy and France are lobbying for immediate relief that often translates into prolonged gas use. The ETS flexibility the Commission is offering, likely a temporary increase in free allowances or a delay in auction volumes, will be portrayed by industry as proof that carbon pricing is negotiable. Climate NGOs will call it a betrayal. The Commission's narrow path is to make the measures time-bound, targeted and reversible. Whether national governments honour those constraints is an open question.