Middle East conflict drives a worldwide energy policy shift
From tax cuts and price caps to rationing and EV incentives, governments are scrambling to shield consumers while speeding up the energy transition.
- Governments are providing immediate financial relief through measures like fuel tax cuts, price caps, and direct subsidies for vulnerable households and key industries like transport and agriculture.
- Countries are implementing measures to reduce energy demand, including fuel rationing, shorter work weeks, and promoting energy-saving campaigns such as working from home.
- The crisis is accelerating the long-term transition to sustainable energy, with many nations using it as an opportunity to cut taxes on electric vehicles and renewable energy products.
The conflict in the Middle East that erupted on February 28, 2026, has sent the biggest shock through global energy markets in history. Shipping through the Strait of Hormuz, which normally carries more than 20 million barrels a day of crude oil and oil products, or around 20% of global oil consumption, has almost ground to a halt.
As a result, crude oil prices have surged above US$100 per barrel, while refined products, diesel, jet fuel and LPG have risen even more sharply. Global LNG supply has also fallen by around 20% as a result of the crisis.
The International Energy Agency (IEA) responded with a unanimous vote by its 32 member countries on March 11, 2026, to release 400 million barrels of emergency oil stocks into the market, marking the largest stock release in the agency’s history. At the same time, it launched the “2026 Energy Crisis Policy Response Tracker” to monitor government measures around the world in real time.
Thailand uses several tools at once, combining price freezes with energy-saving measures
Thailand has adopted a mixed approach, including freezing cooking gas prices until May, using the Oil Fuel Fund as a buffer, increasing the share of biofuels in fuel, and promoting energy-saving campaigns in both the public and private sectors. It is also encouraging working from home, online meetings, and setting air-conditioning temperatures no lower than 26 degrees Celsius.
Tax cuts and price caps are the first measures governments have adopted
The most popular measure among developed countries has been to cut fuel taxes to absorb the shock from global market prices. India has cut excise duties on petrol and diesel, while Spain has suspended the hydrocarbon tax and reduced fuel VAT.
Ireland has cut excise duties and introduced special welfare support for vulnerable groups, while Italy, Poland, Sweden and South Africa have adopted the same strategy.
In Asia, Vietnam has temporarily cut fuel import tariffs until the end of April, while Cambodia has reduced fuel VAT to ease the burden on the public.
For price caps, Hungary, South Korea, Croatia, Poland and Mexico have chosen to directly limit retail prices, while Austria and Czechia have controlled prices by capping retailer margins. Japan has used state subsidies to support its price cap, while Germany has introduced a rule barring petrol stations from raising prices more than once a day.
Direct subsidies target occupational groups and vulnerable households
The Philippines has introduced measures ranging from fuel subsidies for bus drivers, taxi drivers, ride-hailing drivers, farmers and fishers to free bus services for students and workers in several cities.
France has provided temporary support for the transport, fishing and agricultural sectors, while Greece has issued fuel cards for households and fertiliser subsidies for farmers. The United Kingdom, meanwhile, has focused on heating support for vulnerable consumers while accelerating the Warm Homes Plan.
Lower-income countries rely on “rationing” and “campaigns”
Among countries with limited budgets, the most common measure has been fuel rationing. Sri Lanka has introduced a QR code fuel quota system for cars and motorcycles. Nepal and the Maldives have reduced cooking gas refills to half cylinders. Myanmar has introduced odd-even driving days alongside fuel rationing, while Bangladesh, Laos and Pakistan have adopted layered measures, including school closures, shorter working weeks and restrictions on fuel distribution.
This crisis is accelerating the energy transition
Notably, many countries are using this crisis as an “opportunity” to speed up the energy transition. Cambodia and Laos have reduced import taxes on EVs and renewable energy products. Chile has subsidised taxis to switch to electric vehicles. Indonesia is accelerating its national biodiesel programme. Spain has cut taxes for households renovating homes and installing solar panels, while the United Kingdom is speeding up approvals for plug-in solar.
This energy crisis is therefore not merely about short-term emergency measures. It may also prove to be a major turning point that pushes the global energy system to change faster than expected.
