Governments Move to Protect Households and Key Sectors from Rising Energy Costs

Overview

Governments around the world have rolled out a variety of policies designed to ease pressure on households and strategically important sectors as energy costs rise amid the U.S.-Israeli war on Iran. Responses differ by country, but common themes include direct price support, temporary tax relief, draws on strategic reserves, export curbs and measures to prioritise domestic supply of fuel, fertiliser and electricity.

Country-by-country measures

• Argentina - The government enacted a partial increase in fuel taxes but has deferred further hikes until June, according to a decree. The step indicates a balance between revenue needs and immediate consumer relief as fuel prices remain under pressure.

• Australia - Canberra has begun releasing petrol/gasoline and diesel from domestic reserves to relieve shortages that are disrupting rural supply chains as well as mining and agricultural activity. In parallel, the prime minister has urged citizens to favour public transport to reduce demand.

• Bangladesh - Authorities are seeking billions in external financing to secure imports of fuel and liquefied natural gas, reflecting an effort to stabilise energy availability amid volatile global markets.

• Brazil - The government announced several measures, including subsidies for diesel and liquefied petroleum gas and reduced taxes on jet fuel and biodiesel. Officials are also exploring ways to accelerate testing of higher biodiesel blends in diesel.

• China - Top leadership pledged to reinforce energy security while pursuing rapid technological development and greater self-sufficiency. Separately, Beijing tightened restrictions in mid-March on exports of most fertiliser products to protect its farmers.

• Egypt - The government and the International Islamic Trade Finance Corporation signed a $1.5 billion loan to support food and energy security. Egypt will slow large state projects with heavy fuel and diesel usage for at least two months and will cut fuel allocations for government vehicles by 30%. The country has also capped the price of unsubsidised bread sold in private bakeries.

• Ethiopia - The government has increased fuel subsidies to alleviate cost pressures.

• European Union - The EU will permit member states to increase spending to subsidise companies hit by higher fuel and fertiliser costs. The bloc is considering rules that would require countries to hold jet fuel stockpiles and potentially allow regional redistribution to address shortages. The European Commission also proposed cutting electricity taxes and coordinating the summer refill of gas storage across member states.

• Greece - The prime minister announced fuel and fertiliser subsidies plus ferry ticket discounts totaling 300 million euros for April and May to support consumers and farmers. Athens also unveiled 500 million euros in additional aid to households and farmers after recording a higher primary budget surplus for 2025 that provided fiscal headroom for fresh support.

• Japan - Tokyo is loosening rules for the fiscal year that began in April to allow greater use of coal-fired power plants. The government has tapped oil stockpiles, implemented gasoline subsidies and is seeking energy supplies from beyond the Middle East. Japan also plans to increase imports of intermediate chemical products such as plastics in light of tighter naphtha supplies attributed to the conflict.

• India - Prime Minister Narendra Modi urged households and businesses to conserve fuel and revive work-from-home practices to reduce petrol and diesel consumption. The government raised a windfall tax on exports of diesel and aviation turbine fuel to help ensure sufficient domestic supply. Authorities have barred consumers with piped natural gas from retaining or refilling LPG cylinders and invoked emergency powers directing refiners to maximise LPG production, a widely used cooking fuel.

• Indonesia - Jakarta announced a package of measures including limits on fuel sales and a "work from home" policy for civil servants. President Prabowo Subianto has pushed to increase coal production, and the government is considering a windfall tax on exports. Indonesia will begin implementing the B50 biodiesel programme on July 1 - a 50% palm oil-based biodiesel blend intended as part of efforts to mitigate risks stemming from the Iran war.

• Italy - Rome extended a cut in excise duties on fuels, with the extension skewed toward diesel rather than petrol.

• Malaysia - The treasury ordered all federal ministries, departments and agencies to trim operating budgets for 2026 due to Iran war costs. Malaysia will raise petrol subsidy spending to 2 billion ringgit from 700 million ringgit to maintain the fuel's fixed price. The government also said it was implementing measures to shore up fertiliser supply amid a domestic crunch.

• Mauritius - The government announced energy-saving restrictions that include curbs on grid power for non-essential uses such as decorative lighting, swimming pool heating and fountains.

• Namibia - Authorities will temporarily halve fuel levies by 50% for at least three months until the end of June, providing a short-term cut to consumer fuel costs.

• The Netherlands - The Dutch government announced temporary tax breaks to offset rising fuel prices and said it would prepare additional measures if the energy situation deteriorates further.

• Nigeria - The Dangote refinery, Africa's largest, has increased exports of gasoline and the widely used chemical urea to African countries affected by supply disruptions linked to the war.

• Philippines - The energy market regulator suspended the wholesale electricity spot market across its three grids until further notice because of fuel supply risks and price volatility. To curb power bills, the government plans to boost coal-fired generation and regulate electricity tariffs. Manila is also working with Washington to obtain waivers that would allow it to acquire oil from U.S.-sanctioned countries to guarantee supplies. The energy ministry said it was activating a 20 billion peso emergency fund to strengthen fuel security amid oil price volatility.

• Poland - Measures designed to keep fuel prices under control in response to the Middle East war may remain in place after May 15 if the situation warrants, according to the finance minister.

• Romania - The government announced a reduction in the excise tax on diesel by 0.30 lei per litre.

• Serbia - Belgrade will cut excise duties on crude oil cumulatively by 60% and has extended a ban on crude oil and fuel product exports.

• Singapore - The city-state said it will roll out a support package worth almost S$1 billion, including cash handouts and fuel vouchers, to offset the economic impact of the conflict.

• Slovenia - Ljubljana temporarily restricted fuel purchases to address pump shortages caused in part by cross-border fuelling and stockpiling.

• South Korea - Seoul is easing limits on coal-fired power generation capacity and raising nuclear plant utilisation to as high as 80%. It has also begun enforcing a ban on naphtha exports to bolster domestic supplies.

• Spain - Madrid proposed measures valued at 5 billion euros to blunt the economic impact of the Middle East conflict on domestic energy prices.

• Sri Lanka - The country is relying on $1.73 billion in funding from international agencies and India to manage the financial burden of soaring energy import costs. Sri Lanka has instituted fuel rationing and declared Wednesdays a public holiday.

• Sweden - Authorities warned of a potential jet fuel shortage and advised travellers to allow flexibility in their plans. The government will reduce fuel taxes and increase electricity subsidies in its spring mini-budget.

• Thailand - The Commerce Ministry tightened crude palm oil exports and controlled bottled palm oil prices. The government plans a borrowing guarantee for an oil subsidy fund and other support measures to mitigate high oil prices. The Thai Planning Agency said the government will freeze prices of some goods and provide support for farmers.

• United Kingdom - Britain intends to weaken the link between electricity costs and volatile gas prices by moving older wind and solar generators onto fixed contracts to help reduce energy bills.

• Vietnam - A government document showed that Vietnam will accelerate the full switch to ethanol-blended gasoline earlier than planned to help curb fossil fuel use.

Analysis - themes and sectors affected

Across the measures, several recurring approaches emerge: temporary tax relief and subsidies to lower prices at the pump; use of strategic reserves and export curbs to secure domestic supplies; measures to increase domestic production of alternative fuels such as biodiesel and ethanol blends; and steps to prioritise consumption for critical uses including agriculture and aviation.

These policies directly affect consumer spending and the household sector through lower or stabilised fuel and food prices. They also have clear implications for agriculture and fertiliser availability where export curbs or targeted stockpiles are used to protect farmers. Energy-intensive sectors such as transport, mining, aviation and heavy industry are also a focus, with measures that range from increased coal and nuclear output to limits on fuel sales and targeted subsidies.

Key points

• Governments globally are deploying a mix of subsidies, tax adjustments, strategic reserve releases and export controls to protect consumers and critical sectors from higher energy costs tied to the U.S.-Israeli war on Iran.
• Actions target a wide set of markets - petrol, diesel, jet fuel, liquefied petroleum gas, LPG, naphtha, fertilisers and electricity - reflecting the multi-faceted nature of energy and input cost pressures.
• Sectors likely to feel immediate impact include households, agriculture (including fertiliser and palm oil markets), transport and logistics, aviation and energy generation.

Risks and uncertainties

• Supply volatility: Several countries have introduced emergency rules or export restrictions to preserve domestic supply, indicating continued uncertainty about the stability of fuel and fertiliser availability, which could constrain industrial and agricultural production.
• Fiscal strain: The expansion of subsidies and emergency funds - including sizable packages and loans noted in multiple countries - creates risks for government budgets and may limit fiscal flexibility for other priorities.
• Operational disruption: Temporary measures such as suspending wholesale electricity markets, rationing fuel, or restricting non-essential energy use could disrupt commercial operations and logistics chains in affected economies.

Conclusion

Policy responses are broad and varied, reflecting each country's fiscal space, energy mix and exposure to global oil, gas and fertiliser markets. Many interventions prioritise immediate consumer relief and protection for farmers and essential industries, while others aim to bolster longer-term energy security through increased domestic output or strategic stockpiling.

As these measures roll out, the interplay between short-term relief and longer-term fiscal and supply-side consequences will be a key factor for markets, households and businesses to monitor.