"We stand side-by-side with Spain in this situation," he added.
Bailly added that Argentina and Spain must forge a solution over YPF that does not "damage the working environment and economic relations between the European Union and Argentina."
The Commission is responsible for helping EU member states protect their investments abroad, although the current accord between the EU and Mercosur, the regional trade bloc of which Argentina is a member, does not have any specific provisions on investments.
Bailly declined to say what instruments would be at the Commission's disposal if Argentina does decide to nationalize Repsol's stake in YPF.
"We are not at a point where we would use instruments against a decision that hasn't been taken yet," he said.
While Repsol shares fell, speculation about the possibility of a re-nationalization of the formerly state-owned company drove YPF stock up sharply. YPF shares trading in Buenos Aires closed up 7.4 percent Thursday at 123 pesos, and YPF closed up 8.6 percent at $22.93 in New York.
Michael Warren and Almudena Calatrava in Buenos Aires and Gabriele Steinhauser in Brussels contributed to this report.