Portugal’s government has drawn up contingency plans to cap energy prices. The catch: it cannot use them until the European Union signs off.

Environment and Energy Minister Maria da Graça Carvalho said on Sunday that Portugal is “getting close to the criteria” for declaring an energy crisis. Natural gas prices have risen roughly 85% since the Middle East conflict erupted on 27 February, driven by supply disruptions from Qatar and broader market stress from the Hormuz blockade.

The declaration is not a supply emergency — Portugal’s gas still flows. It is a legal instrument that would allow Lisbon to impose price controls and offer state support to households and businesses, measures that would otherwise breach EU competition rules.

The bar is set in Brussels. Under EU Directive 2024/1788, a natural gas price crisis can be declared when wholesale prices reach 2.5 times their five-year average and exceed €180 per megawatt-hour, or when retail prices surge by around 70%. The Council of the EU must then approve any member state’s intervention.

That creates a lag between market stress and government action. “A resolution must be achieved by the Council of Ministers and the European Commission informed,” Carvalho said. A European Council decision is also required.

The government approved a framework of crisis measures this week covering both consumers and companies. These include temporary price limits, though Minister for the Presidency António Leitão Amaro stressed that Portugal remains “a long way off” from the formal EU thresholds.

Electricity is less exposed. Roughly 80% of Portugal’s power comes from renewables, insulating it from the gas price shock. Any crisis declaration would apply only to natural gas.

The broader picture is grim. IEA Executive Director Fatih Birol said on Monday that the Hormuz disruption has hit global energy markets harder than the 1970s oil shocks and the Ukraine war combined. With 20% of global oil and LNG supply squeezed through a bottleneck, Lisbon is preparing for a scenario it hopes not to use.

Sources