Economy Minister Katherina Reiche stressed that Germany’s energy supply remains secure despite a roughly 30% jump in oil prices following the US‑Israel conflict with Iran. She said there is enough crude available and no immediate gas shortage, noting the EU depends on Gulf gas for under 4% of its consumption.
Internationally coordinated action has sought to calm markets: the International Energy Agency urged its 32 members to release 400 million barrels from strategic reserves—the largest such release in IEA history. The IEA also requires members to hold reserves equal to an average 90 days of imports. Germany keeps 19.5 million tonnes of crude (about 143 million barrels) in largely secret underground caverns and plans to release around 2.4 million barrels.
Berlin is preparing domestic measures to curb pump-price volatility. Reiche has proposed allowing petrol stations to raise prices only once per day while permitting price cuts at any time. The government is also considering tougher antitrust powers for the Federal Cartel Office to tackle price-fixing and excessive increases.
Around one fifth of global oil flows through the Persian Gulf, and Iran has halted ship movements through the Strait of Hormuz since the attack by the US and Israel. Marcel Fratzscher of the German Institute for Economic Research called strategic reserve releases sensible but warned they are not a cure-all: the 400 million barrels now being released would cover a blockade for just under three weeks, and a longer closure would leave reserves largely inadequate.
Germany’s economy is already strained after most Russian gas imports were cut following the full‑scale invasion of Ukraine, which pushed energy costs higher. Industry leaders say elevated energy bills have weakened international competitiveness, industrial production has fallen, and investment is relocating abroad. Businesses also cite burdens from bureaucracy and regulation, while unpredictable US tariff policy has added further pressure to Germany’s export‑driven model.
The government has responded with large public spending plans to modernize the military and upgrade infrastructure, but economists disagree on how the Middle East upheaval will affect those plans. The DIW projects roughly 1% GDP growth this year, a forecast that assumes the current energy-price peak has passed and that prices decline in the second quarter. Other analysts are less optimistic: Gabriel Felbermayr warned that a permanent loss of 20% of global oil and gas capacity would be severely damaging, and the head of the Kiel Institute for the World Economy has argued every $10 rise in the oil price per barrel cuts growth in industrialised countries by about 10%.
A simulation by the German Economic Institute suggests that if oil reaches $100 a barrel, Germany could lose 0.3% of GDP this year and 0.6% in 2027—equivalent to tens of billions of euros.
Chancellor Friedrich Merz has stressed that neither Germany nor Europe wants an endless war and warned further escalation would undermine security, energy supplies and could affect migration. Energy‑intensive sectors such as chemicals, steel, machinery and transport are particularly exposed to higher fuel and logistics costs; disruptions to air and sea traffic are also lengthening transit times and raising expenses.
The automotive industry, already under strain, faces additional headwinds: Volkswagen plans to cut about 50,000 jobs in Germany by 2030, and Porsche reported a profit slump of more than 91%. By contrast, defence manufacturers are seeing higher demand—Rheinmetall has reported rising orders for air‑defence systems and improved financial results.
Economists warn that while reserve releases and temporary measures can ease immediate shocks, prolonged disruptions or sustained price spikes would inflict broader and deeper damage on Germany’s recovery prospects.