EU leaders in Cyprus approved a €90 billion loan to Ukraine as they scrambled to limit the economic fallout from the US-Israel-led war with Iran. At a two-day summit in Ayia Napa, they also pressed Brussels to draw up emergency energy measures — convening oil and gas coordination groups and weighing demand-saving steps, temporary state aid rules and tougher interventions if supplies stay tight.

Loan for Ukraine and wider security agenda

EU leaders began their summit by clearing a long-delayed, €90 billion loan to Ukraine, a move that leaders said will fund military needs and reconstruction priorities. Ukrainian President Volodymyr Zelenskyy joined the meeting in Ayia Napa and told reporters the funds would help strengthen Ukraine's army, boost domestic drone production and support electronic-warfare systems.

Several delegations framed the loan as a signal of long-term European backing for Kyiv at a moment when warfare in both Eastern Europe and the Middle East is putting added pressure on European governments.

Energy shock from the Iran war

The summit shifted quickly to the fallout from the conflict with Iran. Brussels has already convened its oil coordination group and its gas group to plot responses. Anna-Kaisa Itkonen, a European Commission spokeswoman, said the oil group met on April 8 and the gas group followed the next day to assess immediate risks to supply and price stability.

European officials warn the conflict has tightened global energy flows because the Strait of Hormuz — a key transit route — has been partially blocked, interrupting about 20 percent of the world's oil and gas shipments. The interruption has pushed refined-product prices higher in Europe and created bottlenecks for fuels such as jet kerosene, which the bloc still imports heavily from the Persian Gulf.

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What Brussels is considering

European Commissioner for Energy Dan Jorgensen told capitals in a written note that while EU direct exposure to the region's production was limited before the conflict, the bloc depends on global markets and competes with other buyers for fossil fuels.

Jorgensen's letter singled out refined products — diesel, asphalt and especially kerosene used in jet engines — as "of particular concern in the short term." The note invited member states to consider demand-saving steps under national contingency plans.

EU officials familiar with the file said the package under discussion ranges from softer measures to far-reaching emergency powers. Ideas on the table include promoting reduced air travel, imposing temporary speed limits on highways, encouraging working-from-home to cut transport demand, and making state aid rules more flexible for energy firms. More drastic options, officials said, could echo emergency tools used after Russia's 2022 invasion of Ukraine — a bloc-wide cap on gas prices or a tax on energy companies' windfall profits.

Several member states have already adopted national measures. Italy, Austria, Hungary, the Czech Republic, Croatia and France have rolled out policies aimed at saving energy or shielding consumers and industry from price spikes.

And national ministers held an emergency meeting of energy ministers ahead of the summit, though they didn't yet sign off on EU-wide mandates.

Economic strain and political pressure

Member states face a political squeeze as leaders consider whether to coordinate any EU-level rationing or price-control moves.

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The summit approved a €90 billion loan to Ukraine and left Brussels' newly convened oil and gas coordination groups to weigh demand-saving steps, temporary state aid rules and possible emergency interventions if supplies remain constrained.

This article was created with AI assistance.