“The most important news first: Germany’s energy supply is secure,” Economy Minister Katherina Reiche said, stressing that despite a roughly 30% price jump after the US-Israel conflict with Iran, there is sufficient oil and no immediate gas-supply concern for Germany. She noted the EU’s low dependence on Gulf gas, under 4% of total consumption.
The government has pushed a message of stability after the International Energy Agency (IEA) called on its 32 members to release 400 million barrels from national reserves—the largest coordinated release in IEA history—to stabilize markets. The IEA obliges members to hold reserves equal to an average 90-day import volume.
Germany itself stores 19.5 million tons (about 143 million barrels) of crude in secret locations, mostly underground caverns, and plans to release 2.4 million barrels. Authorities are also preparing measures to limit price volatility at petrol pumps: Reiche proposes allowing stations to raise prices only once daily while permitting price cuts at any time. Berlin is considering strengthening antitrust law to give the Federal Cartel Office broader powers to counter price-fixing and excessive increases.
Around one-fifth of global oil production is routed through the Persian Gulf, and Iran has halted ship movements through the Strait of Hormuz since the attack by the US and Israel. Using strategic reserves is “sensible, but not a remedy for all difficulties,” said Marcel Fratzscher of the German Institute for Economic Research (DIW). He estimates the 400 million barrels now being released would offset a blockade for just under three weeks; a prolonged closure would render reserves only “a drop in the ocean.”
Germany’s economy is already under pressure after almost all Russian gas imports were cut following the full-scale invasion of Ukraine, pushing energy costs high. Industry complains that elevated energy prices weaken international competitiveness. Industrial production has declined, and investment is moving abroad. Businesses also cite burdens from bureaucracy and regulation. Unpredictable US tariff policy has added strain to Germany’s export-driven economy.
The government has launched large public spending programs to modernize the military and upgrade infrastructure. Economists disagree on whether the Middle East conflict will derail those plans. The DIW projects GDP growth of about 1% this year, but that forecast assumes the current peak in energy prices has passed and prices fall in the second quarter. Other analysts are less optimistic: Gabriel Felbermayr warned a permanent loss of 20% of global oil and gas capacity would be severe. The head of the Kiel Institute for the World Economy has said that every $10 rise in the oil price per barrel would cut growth in industrialized countries by 10%.
A simulation by the German Economic Institute (IW) suggests that if oil reaches $100 per barrel, Germany could lose 0.3% of GDP this year and 0.6% in 2027—amounting to tens of billions of euros in damage.
Chancellor Friedrich Merz has emphasized that Germany and Europe have no interest in an endless war, warning that further escalation would hurt security, energy supplies, and could affect migration. Energy-intensive sectors—chemicals, steel, machinery, and transport—are particularly exposed to rising fuel and logistics costs. Disruptions to air and sea traffic are lengthening transit times and raising expenses.
The automotive sector, already strained, faces further headwinds: Volkswagen plans to cut around 50,000 jobs in Germany by 2030, and Porsche recently reported a profit slump of more than 91%. By contrast, defense manufacturers are benefitting from increased demand: Rheinmetall reported rising orders for air defense systems and improved financials.
Economists caution that temporary measures and reserve releases can ease short-term supply shocks, but sustained price spikes or prolonged disruptions would inflict broader and deeper damage on Germany’s recovery prospects.