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The energy transition is reducing Europe's exposure to gas. In Spain, the strong expansion of renewables has helped contain wholesale prices, but system costs have prevented this decline from being fully passed on to consumers.

The government’s measures arrive on time and can cushion part of the war’s impact on economic activity and prices if the shock is temporary. If energy prices continue to rise, more targeted measures will be needed—ones that do not distort price signals.

The quote “it is difficult to make predictions, especially about the future” is attributed to Niels Bohr. Today, it is even more so in an environment of high uncertainty. The increase in costs caused by the war between the U.S. and Israel against Iran will have negative effects on the Spanish economy.

The balance of 2025 showed economic resilience in the face of geopolitical tensions, supported by lower inflation and investment. The war in the Middle East is a supply shock, whose impact will depend on how long it lasts and how oil prices evolve.

Geopolitical crises do not automatically trigger energy transitions. They accelerate diversification only when economically viable and scalable substitutes already exist. Price spikes alone are insufficient; transition dynamics are shaped by shifts in perceived supply risk, technological readiness, and policy responses.

2025 was marked by a downward trend in oil prices, starting the year at around $75 dollars per barrel of Brent crude and closing at $61, with a full-year average of $68.

Oil prices have experienced high volatility this year. Lower global demand and increased supply from OPEC+ have driven a bearish trend, which was recently interrupted by tensions between Israel and Iran. The outlook remains uncertain, especially concerning a potential blockade of the Strait of Hormuz.