The United States and Israel's strikes on Iran have brought chaos to one of the world's most oil-rich regions, with long-lasting consequences for global energy supplies, writes "Politico". Shipping traffic has all but ground to a halt through the Strait of Hormuz in the Persian Gulf, a key point for a fifth of the world's oil and gas trade. That has led governments to panic about supply chains and look for alternatives.
Where does Europe stand? Although less dependent on oil and gas from the Persian Gulf than Asia, it faces pressure as prices rise and key transit routes shrink. And if the conflict drags on for too long, it risks escalating into a full-scale crisis.
Rising prices
Europe is not a big importer of fossil fuels from the Persian Gulf - less than 10 percent of its gas comes through the Strait of Hormuz, and not much more for oil. Closing the route means the loss of a huge part of global supplies, which in turn raises prices everywhere.
European natural gas prices have risen sharply since the start of the war, almost doubling to 56 euros per megawatt-hour by March 3. Gas accounts for 20 percent of Europe's energy and is vital for heating, power generation and the energy industry. Higher prices will increase the bills of European industry and households, which already struggle with some of the highest energy costs in the world.
If this continues for long, European industry is expected to complain even more loudly about how uncompetitive Europe has become. This in turn will increase pressure on the EU to weaken climate policies, such as the Emissions Trading System, which are seen as imposing additional costs on business.
Oil prices have also risen since the weekend attacks, rising by 10 percent since the start of the war. The EU gets most of its oil from Norway and the US, but that will still push up prices at the gas station.
Exhausting opportunities for diversification
European countries, once hopelessly dependent on Russian fossil fuels, have been racing to diversify their supply chains since Russia invaded Ukraine in 2022 - largely meaning a shift to the US, which now supplies as much as 60% of Europe's liquefied natural gas.
It seemed like a good deal until US President Donald Trump threatened to annex Greenland last year, making the new dependency look risky. EU officials have mentioned countries in the Middle East, Central Asia and North Africa, including Qatar, the UAE, Algeria and Azerbaijan, as potential alternative sources of supply.
But since the Gulf conflict, two of these producers have lost their appeal: Qatar’s giant liquefied natural gas (LNG) plant, the source of 20% of the world’s LNG supplies, halted production on Monday, while the UAE shut down a major gas complex in northern Iraq last week. Affected Asian buyers are also scrambling to secure new supplies.
The renewed instability in the Middle East could also complicate efforts to end gas imports from Moscow to the EU. Hungary, which, along with neighboring Slovakia, still imports huge amounts of Russian gas and oil, has already taken advantage of the war with Iran to highlight the importance of Russian oil.
Dwindling reserves
A halt to Qatari gas production is made more dangerous by Europe’s depleted gas reserves, which in March fell to a four-year low of about 30 percent of maximum capacity, according to data from ENTSOG, an association of transmission system operators.
Many member states are struggling to meet EU storage targets set after the 2022 invasion of Ukraine, and colder winter temperatures are further depleting reserves – especially in Germany, which is reportedly pushing for an end to the EU’s targets.
Meanwhile, the EU already requires member states to maintain 90 days of emergency oil stocks. However, non-EU countries in the Balkans and Eastern Europe have yet to fully meet similar targets, with oil reserves ranging from low to non-existent in countries such as Albania and Bosnia and Herzegovina, according to a 2025 report by the Energy Community, which represents those countries.
While member states are still trying to gauge how the war will play out, strategic reserves of gas and oil have not yet been deployed, officials from multiple countries told POLITICO. Many officials remain optimistic about the near-term outlook, highlighting diversified energy supplies — particularly U.S. liquefied natural gas.
A complete shift away from fossil fuels
Renewable energy and climate change groups have been quick to point out that Europe would not be at risk of an energy crisis if all of its energy came from domestic renewables. The UN climate chief, Simon Steele, said the shock shows once again that reliance on fossil fuels leaves economies, businesses, markets and people at the mercy of any new conflict or shift in trade policy. Renewables, he said, are cheaper, safer and faster to market, making them an obvious path to energy security and sovereignty.
"Nobody wanted another example of Europe's extreme vulnerability to fossil fuel imports, but here we are," said Adrian Hill, director of the Electrification Alliance. He called for a "massive push" for electric vehicles, heat pumps, renewables and batteries.
Although renewables now generate almost half of the EU's electricity, they still only account for 20 percent of the bloc's total energy mix. And electrifying things like industry, transport and heating takes decades - it's not the answer to an immediate crisis. However, the Gulf conflict is likely to cement a new trend: energy security, not climate, has become Europe’s main argument for boosting the renewable energy sector.
Tanker Troubles
The Strait of Hormuz has been under intense pressure for the past three days, with shipping all but ground to a halt. "In the 15 years I’ve been covering the oil and shipping markets, this is probably the biggest event I’ve seen," said Matthew Wright, chief cargo analyst at Kpler, comparing the shock to Covid and the war between Russia and Ukraine.
But this crisis carries a uniquely dangerous geopolitical dimension, he added, with Iran’s political future uncertain and regional tensions escalating. Normally, 15 to 18 million barrels of crude oil pass through the narrow waterway every day – roughly a fifth of the world’s oil consumption. "That has dropped to almost zero", Wright explained.
Fewer than 10 ships a day are now attempting to pass through the Strait of Hormuz, with at least four ships reportedly hit amid escalating regional military tensions, and nearby ports also under attack. European shipping giants Maersk, Hapag-Lloyd, MSC and CMA CGM have suspended transit through the strait until further notice, directing Gulf-bound ships to safe anchorages and rerouting their services around the Cape of Good Hope.
Insurance has also become a crucial constraint. War risk cover was briefly withdrawn and is now being reinstated at sharply higher premiums, with hull and cargo insurance rising by 200% to 300% in some cases. Without insurance, Wright noted, ships simply can’t sail.
Donald Trump has offered to provide naval escorts and political risk insurance for oil and gas tankers transiting the Strait of Hormuz. The announcement capped a rally that has added more than $10 a barrel to oil since the United States and Israel launched strikes on Iran on Saturday. Still, energy markets remain nervous that key oil and gas assets in the Persian Gulf could be targeted by Tehran.