In response to the joint US-Israeli military offensive against Iran launched on 28 February 2026, Iranian authorities obstructed the passage of commercial vessels through the Strait of Hormuz, shutting a chokepoint¹ through which around one quarter of global oil supplies normally transit. The closure has removed roughly 11 million oil barrels per day² of crude from the market, a shortfall that exceeds the combined interruptions of the 1973 and 1979 oil crises and has inaugurated a severe global energy crisis. Prices for crude oil and fertilisers have risen sharply, pushing long‑term charts back towards the historical peaks seen during the 2008 crisis, the Covid‑19 and Ukraine war shock of 2022³.
Brent prices rose above 110 dollars per barrel in the first weeks of the crisis⁶ while nitrogen fertilisers saw price increases above 30%, with agricultural commodity indices revisiting historical spikes.⁷
The 2026 Middle East energetic crisis has therefore turned into a stress test for the European competitiveness and strategic autonomy exposing how far the EU still lags behind the United States and China in structural energy resilience and in the capacity to shield industry from fossil‑fuel shocks.⁸
This shock interacts with a pre‑existing European competitiveness challenge tied to energy prices. The Commission’s Action Plan for Affordable Energy acknowledges that energy poverty affects more than 46 million Europeans and that retail industrial electricity prices in 2023 were almost double the 2014–2020 average.⁹ As diagnosed in the 2024 Draghi report, EU industrial electricity prices in 2024 were 2.2 times those in the United States, roughly twice Chinese levels and around 1.2 times Japanese levels, signalling how the electricity cost is placing the EU outside the industrial competition.¹⁰ The energy transition has made liquified natural gas (LNG) the main electricity price setter in Europe, notably in Belgium, Greece, Italy, and the Netherlands and LNG exports are now significantly limited from the closure of the Strait of Hormuz.¹² This is how the Middle-East 2026 energetic crisis is pushing Europe even further into dependence on the United States, which in 2025 accounted for 57% of its LNG imports, raising concerns about over‑exposure to a single supplier.¹³ The Clean Industrial Deal (CID), presented in February 2025, is the EU’s attempt to close this gap by simultaneously lowering energy costs, accelerating decarbonisation and restoring clean industrial capacity.
What are the strategic implications of the 2026 energy crisis on the European competitiveness? How can the European Union leverage this crisis to accelerate its transition into an integrated industrial power?
References
- CSIS (n.d.) ‘Strait of Hormuz: 8 Charts’. https://www.csis.org/analysis/strait-hormuz-8-charts
- Brookings (n.d.) ‘The Iran conflict’s energy shocks are not yet fully realized’. https://www.brookings.edu/articles/the-iran-conflicts-energy-shocks-are-not-yet-fully-realized/
- Brookings – The Iran conflict’s energy shocks are not yet fully realized. https://www.brookings.edu/articles/the-iran-conflicts-energy-shocks-are-not-yet-fully-realized/
- CSIS (n.d.) ‘Strait of Hormuz: 8 Charts’. https://www.csis.org/analysis/strait-hormuz-8-charts
- Statista (n.d.) ‘World maritime chokepoints’. https://www.statista.com/chart/34642/world-maritime-chokepoints/
- Purdue University (n.d.) ‘The March 2026 CPI report: what it tells us about the Iran conflict’s inflation footprint (and what is still coming)’. https://ag.purdue.edu/commercialag/home/paer-article/the-march-2026-cpi-report-what-it-tells-us-about-the-iran-conflicts-inflation-footprint-and-what-is-still-coming/
- Purdue University (n.d.) ‘The Iran conflict: energy prices and U.S. farm profitability (a balanced assessment)’. https://ag.purdue.edu/commercialag/home/paer-article/the-iran-conflict-energy-prices-and-u-s-farm-profitability-a-balanced-assessment/
- Oxford Institute for Energy Studies (n.d.) ‘’Unpacking the Hormuz Crisis:
Implications for energy markets and the energy transition”. /api/wp-media/2026/05/OEF-149.pdf - European Commission (2025) ‘Action Plan for Affordable Energy’ (COM/2025/79). https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52025DC0079
- Oxford Institute for Energy Studies (n.d.) ‘The Hormuz crisis 2026 and European electricity prices: lessons from historical shocks’ https://www.oxfordeconomics.com/resource/iran-and-the-strait-of-hormuz-risks-to-global-energy-prices/
- ScienceDirect – Energy Reports – “The role of natural gas in setting electricity prices in Europe” https://doi.org/10.1016/j.egyr.2023.09.069
- Oxford Institute for Energy Studies (n.d.) ‘Implications for energy markets and the energy transition’. https://www.oxfordeconomics.com/resource/iran-and-the-strait-of-hormuz-risks-to-global-energy-prices/
- Institute for Energy Economics and Financial Analysis – https://ieefa.org/articles/europe-source-two-thirds-its-lng-imports-us-2026-dependence-deepens
Assessing the Energy Supply Disruption Following the Strait of Hormuz Closure
The closure of the Strait of Hormuz (SOH) has started the greatest¹ energy supply interruption in the global history of fuel, significantly driving up the prices of petroleum, gas and fertilizers on a global scale.
The following data defines the amount of maritime trade² passing though the main strategic chokepoints on the globe: Strait of Malacca 21.6%, Taiwan Strait 21.2%, Strait of Gibraltar 18.1%, Bab el-Mandeb Strait 16.5%, Suez Canal 16.4%, Dover Strait 16.3%, Korea Strait 10.6%, SOH 7.9%, Panama Canal 6.7%.
Only around 7,9% of the global maritime trade passes through the SOH and this data shows how this chokepoint is quite marginal to the world economic infrastructure, expecially when confronting it to other main maritime straits. Yet, the SOH is the world’s second-largest maritime chokepoint by oil transit, after the Strait of Malacca³ (23.7 million barrels per day), with an average of 20.9⁴ million barrels per day in 2023. In other words, the amount of maritime trade passing trough the strait of hormuz is marginal to the world trade in general, but crucial to the middle-exporters’ capacity to sustain the energy market.
Europe can’t escape the price shock
Europe’s exposure to the SOH interruption is much lower compared⁵ to Asia.
In 2024, 84%⁶ of the daily oil-barrel flows through the Strait of Hormuz were destined for Asian markets, with China, India, Japan, and South Korea alone absorbing 69%⁶ of those flows. By comparing the transit volumes of goods and energy through the Strait of Hormuz, it is evident that the energy shock is asymmetric⁷ across different regions.
In terms of crude, Europe imported 520⁵ thousand barrels of crude via SOH in 2025 constituting around 5%⁵ of its total crude imports and only about 4%⁸ of the crude and 7% of the liquefied natural gas (LNG) that passes through the Strait of Hormuz. Around 90% of this exposure is concentrated in middle distillates, especially jet fuel, for which imports via the SOH account for nearly half of total imports (45%⁵).
Despite its lower exposure to the SOH, Europe can’t escape from the price shock and inflationary pressures. In March, EU energy prices increased 4.9% compared to a 3.1% decline in February causing inflation to rise from 1.9% in February to 2.5%. In the weeks of March following the start of the conflict, diesel prices rose by 19.1% and petrol by 10.6% relative to February. After that, a complex mechanism amplifies the consequences of that small import into a large macroeconomic shock with gas feeding into ammonia and from there into nitrogen fertiliser; oil feeds into naphtha and from there into petrochemicals.⁸
The Commission’s Spring 2026 Forecast notes that EU GDP growth is now projected to slow to 1.1% this year, driven by the adverse economic effects of the Middle East War. Euro Area GDP is expected to decline from 1.4% in 2025 to only 0.9% in 2026 and recover slightly to 1.2% in 2027 and 2.0% in 2028. At the same time, inflation in the EU is expected to rise to 3.1% in 2026 and 3.0% for the Euro Area. The impact of the energy shock is set to extend into 2027, with EU GDP growth picking up to a modest 1.4% and inflation easing to 2.4%, still 0.3% higher than projected in autumn 2025.
Post-Ukraine Replay: Diversified Supply, Persistent Price Exposure
Coming less than five years after the energy shock triggered by Russia’s war of aggression against Ukraine, the USA-Iran conflict in late February has driven up energy prices returning to levels last seen in early 2022, reminding consumers and businesses of the fragility of global supply chain.
Following the Russian-Ukraine war in 2022, Europe’s imports of Russian products have declined sharply following the 6th EU sanction package against Russia, which took effect at the start of 2023. To replace these losses, the EU had to rely on alternative sources of supplies from more distant sources, lengthening the supply chain and increasing its cost.
One of these sources has been the Gulf Cooperation Council (GCC) which between 2020 and 2024 saw an expansion in refining capacity (+1.6 mb/d), refining runs (+1.5mb/d), and exportation of products (+1.56 mb/d). Between 2022 and 2025, Europe increased its imports from the Gulf by 230 kb/d to 700 kb/d⁵.
In 2025, Saudi Arabia and Kuwait were the main suppliers together accounting for nearly 80% of the total imports with diesel and jet fuel together accounting for about 70% of those imports. GCC diesel and jet fuel exports to the EU declined by 70% (or 370 kb/d) in March 2026.⁵
Given those shifts in the european energy supply chain, it is evident how the nature of the current energy crisis and the economic context in which it unfolding differs significantly from 2022. So far, the current shock remains more limited in scale than that of 2022 energy crisis, when energy markets experienced a larger disruption. At that time, Europe was heavily reliant on Russian gas, which accounted for approximately 45% of its liquefied natural gas (LNG) imports. This dependency, combined with limited scope for substitution and reliance on fixed infrastructure, made the disruption particularly severe. Even before Russia’s invasion of Ukraine, oil prices had already tripled between October 2020 and March 2022, while natural gas prices had risen even more sharply as Russia gradually curtailed supply.
The disruption of gasflows led to unprecedented price spikes, with gas prices rising to fifteen to twenty times compared to the autumn 2021 levels. Oil prices peaked at around USD 130 per barrel in March 2022.
By contrast, the EU is also better positioned today. It has significantly reduced its reliance on fossil fuels, both through the expansion of renewable energy. At the same time, it has diversified its imports of gas now importing from the US. Finally, the EU economy entered the current crisis in a more mature and stable phase of the business cycle than in 2021-22, when the post-pandemic recovery and supply chain disruptions had fuelled inflation and labour market pressures.
If the gas and oil supply conditions normalise relatively quickly, even if only partially, as expected by the Commission and the IMF, oil and gas prices are projected to peak in the current quarter before gradually declining to around 20% above pre-war levels by end-2027.
Critical Bottlenecks: Transport Fuels and Fertiliser Inputs
Despite EU’s efforts to electrify its transport, this sector (road transport, shipping and aviation) remains highly reliant on petroleum products where in 2023 motor gasoline and diesel oil made almost 98% of energy consumption in road transport (car and vans and heavy duty vehicles), almost 100% in domestic and international air transport. Jet fuel as well as fertilizers are not substituable in the short term with Qatar and Iran being the world’s largest exporters of urea, the dominant nitrogen fertiliser. Naphtha and jet fuel tells a similar story and those essentials carry Europe’s food prices.⁸
Uneven EU Fuel Inflation Reflects National Exposure
Price developments varied across Member States, reflecting different exposures and relief strategies. Diesel prices increased in all EU economies between March and April 2026, with the largest increases recorded in Slovenia (+23.5%), Bulgaria (+19.5%) and Cyprus (+18.0%), and the smallest in Poland (+1.9%), Romania (+2.3%) and Bulgaria (+2.6%). For petrol, 23 EU economies recorded price increases between March and April 2026, ranging from 12.9% in Slovenia and 1.3% in Ireland. By contrast, prices declined in Romania (-1.2%), Spain (-4.6%) and Poland (- 6.1%).⁸
Emergency Mitigation: IEA Stock Release and National Price Relief Measures
the IEA coordinated the largest release of oil reserves in history, a coordinated sale of 400 million barrels⁹ of which 301 million barrels¹⁰ are crude oil with the EU contributing around 118 million barrels. Given the size of the supply shock and its duration, the impacts of the current release will provide only temporary relief.
To help offset the shock on final consumers, some countries are considering tax cuts (Italy), providing subsidies for some products (UK), fuel aid packages to some sectors and loans to small businesses (France), caps on retail fuel margins (Greece) and fuel price caps (France)⁵.
Gas Dependence Drives Electricity-Bill Vulnerability in Europe
The linkages between gas and electricity prices remain interconnected. The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that a EUR 10/MWh increase in gas prices raises the cost of marginal electricity generation by around EUR 17–18/MWh. Wholesale price movements tend to feed through more directly to industrial electricity prices. IEEFA estimates that a 60% rise in wholesale electricity prices, equivalent to around 20 EUR /MWh above pre-February 2026 levels, would increase the average European household’s annual electricity bill by around EUR 80–100, although the impact would vary across countries. Italy and Ireland appear among the most vulnerable, with estimated annual bill increases of around EUR 120 and EUR 107, respectively, as gas plays a major role in electricity price formation in both countries. Italy is particularly exposed, given that gas accounts for around 40% of power generation and roughly one-third of its LNG imports come from Qatar. Germany, where gas represents around 13% of power generation, is expected to face a more moderate impact, while France’s extensive nuclear fleet provides a significant buffer against gas-related electricity price spikes.¹¹ The shock forced governments to spend over €680 bln¹² to protect households and firms.¹¹
Europe’s pivot away from Russian gas has increased its reliance on US LNG. European imports of US LNG more than tripled between 2021 and 2025. The dependence on US LNG varies greatly among individual European countries. In terms of direct deliveries, it is highest in Germany, where more than 90% of LNG imports come from the United States and in seven other countries, including Poland and the UK, where this share exceeds 70%.¹³
Among them, Spain and the Netherlands rely most heavily on LNG, which accounts for more than 60% of their total gas imports. Germany’s reliance on LNG is the lowest, at just 9% in 2023. According to Bruegel’s estimates, LNG accounted for more than 46% of the EU’s gas imports from third countries in 2025.¹³
Iberian Resilience and Low Gulf Exposure
From a supply perspective, one of Spain’s main strengths is its low direct exposure to the Persian Gulf. Around 10% of the country’s oil imports come from the region (mainly from Saudi Arabia and Iraq), while for natural gas this percentage is less than 2%, primarily from Qatar. This limited dependency reduces the risk of physical supply disruptions. However, the global nature of the energy market means that a sustained global interruption is reflected in prices regardless of the origin of the imports.¹⁴
The peninsula has significant energy resources and infrastructure, including LNG terminals, a natural gas pipeline from Algeria.
Algeria has emerged as a key alternative, drawing increased diplomatic engagement from the European Union. According to the International Energy Agency (IEA) assessment in 2019, Algeria holds the third-largest technically recoverable shale gas resources globally (EIA, 2019).¹⁵ Algeria’s significance stems not only from its considerable gas reserves and potential for production expansion but also from its geographical proximity to Europe and its robust gas infrastructure.¹⁶
Following Russia’s invasion of Ukraine, Algeria has witnessed a series of high-profile visits from European delegations, including the Italian president, the French president, and the president of the European Council. Energy supply emerged as a central theme in the bilateral discussions, highlighting Algeria’s potential significance in bolstering Europe’s energy security.
References
- IEA (n.d.) ‘Oil Market Report’ (PDF). https://iea.blob.core.windows.net/assets/a25ddf53-cd6c-4910-ac90-16bfd28399e7/-12MAR2026_OilMarketReport.pdf
- CSIS (n.d.) ‘Strait of Hormuz: 8 Charts’. https://www.csis.org/analysis/strait-hormuz-8-charts
- Statista (n.d.) ‘World maritime chokepoints’. https://www.statista.com/chart/34642/world-maritime-chokepoints/?utm_source=perplexity
- U.S. EIA (n.d.) ‘Today in Energy: …’ https://www.eia.gov/todayinenergy/detail.php?id=65504&utm_source=perplexity
- Oxford Institute for Energy Studies (2026) ‘Europe’s oil vulnerability’ (PDF). /api/wp-media/2026/04/Comment-Europes-oil-vulnerability.pdf
- Pecos Operating (n.d.) ‘Hormuz dependency by country’. https://pecosoperating.com/hormuz-dependency-by-country-a-critical-energy-chokepoint-under-scrutiny/
- IMF (2026) ‘How the war in the Middle East is affecting energy trade and finance’. https://www.imf.org/en/blogs/articles/2026/03/30/how-the-war-in-the-middle-east-is-affecting-energy-trade-and-finance
- Intereconomics (2026) ‘A critical inputs playbook: what the Strait of Hormuz tells Europe’. https://www.intereconomics.eu/pdf-download/year/2026/number/3/article/a-critical-inputs-playbook-what-the-strait-of-hormuz-tells-europe.html
- IEA (n.d.) ‘IEA member countries to carry out largest-ever oil stock release…’. https://www.iea.org/news/iea-member-countries-to-carry-out-largest-ever-oil-stock-release-amid-market-disruptions-from-middle-east-conflict
- IEA (n.d.) ‘IEA confirms member country contributions…’. https://www.iea.org/news/iea-confirms-member-country-contributions-to-collective-action-to-release-oil-stocks-in-response-to-middle-east-disruptions
- Free Policy Briefs (2026) ‘Hormuz shock: EU gas security, decarbonization fragility’. https://freepolicybriefs.org/2026/03/23/hormuz-shock-eu-gas-security-decarbonization-fragility/
- Reuters (2023) ‘Europe’s spend on energy crisis nears 800 billion euros’. https://www.reuters.com/business/energy/europes-spend-energy-crisis-nears-800-billion-euros-2023-02-13/
- OSW (2026) ‘Excessive dependence: growing role of US LNG…’. https://www.osw.waw.pl/en/publikacje/osw-commentary/2026-02-04/excessive-dependence-growing-role-us-lng-and-oil-eu-market?utm_source=perplexity
- CaixaBank Research (n.d.) ‘Spain to face new energy shock…’. https://www.caixabankresearch.com/en/economics-markets/activity-growth/spain-face-new-energy-shock-comparison-europe?utm_source=perplexity
- ScienceDirect (n.d.) Article (bib reference). https://www.sciencedirect.com/science/article/pii/S2352484724001707?via%3Dihub#bib35
- ScienceDirect (n.d.) Article. https://www.sciencedirect.com/science/article/pii/S2352484724001707?via%3Dihub
Conclusions and Strategic Recommendations
Conclusions and Strategic Recommendations
Global disruptions to import routes and prolonged geopolitical market shortages, as well as the targeted destruction of critical infrastructure are currently scarcely covered at a corporate strategy level. New resilience planning tools can have a particularly significant impact in the European competitiveness.¹ ²
The Hormuz crisis has not altered the EU’s strategic decision to reduce its dependence on Russian energy. Although a renewed commercial opening toward Russian suppliers could offer short-term price and supply advantages, the European Commission is concerned that a centrifugal dynamic among member states may happen and has rejected this option. Brussels therefore assesses that using the crisis to reopen negotiations with Moscow, including through leverage associated with the 21st sanctions package, would undermine the credibility and coercive value of the EU sanctions regime. EU energy choices remain closely linked to the transatlantic relationship. ¹
Moving to a corporate-strategy perspective, energy-intensive firms should establish a formal energy-risk framework that maps exposure across fuel procurement, LNG terminals, pipelines, electricity grids, shipping routes, critical suppliers, spare parts, and digital systems. The framework should use recurring stress scenarios rather than base-case forecasts alone, including prolonged LNG shortages, disruption of offshore infrastructure, hybrid attacks, and cascading power-system failures. The report recommends a regularly updated energy-risk inventory and the systematic incorporation of stress cases into grid and gas planning.³ ⁴
AI infrastructure should be treated as an energy-sensitive sector. Data centres and AI-related computing require reliable, high-volume electricity supply. If the conditions created by the Hormuz crisis persist, power-price volatility and supply constraints could weaken the commercial assumptions behind continued expansion in AI infrastructure, particularly in regions where grids are already congested.³ ⁴
For European corporate strategy, the central implication is that resilience must be incorporated into investment decisions. Firms should assess renewable procurement, storage, supply redundancy. Private energy firms should be required to maintain minimum strategic energy reserves as a core component of national resilience policy. The report’s comparative evidence shows that market-based supply alone may be insufficient during prolonged disruptions caused by war, hybrid attacks, import interruptions, or failures of critical infrastructure. Finland offers a particularly relevant model: alongside state-held reserves, importers are subject to statutory stockpiling obligations and retain legal ownership of the stocks but cannot freely dispose of them during a crisis; together, these public and corporate reserves exceed European minimum requirements and cover key fuels, including oil, coal, and substitute fuels for gas (pp. 18–19, sec. 4.1.3). Accordingly, governments should establish legally binding, risk-based reserve obligations for private firms operating in strategically important energy sectors, while defining transparent rules for financing, storage, release, and state coordination. Businesses should define which operations must remain active during an energy shortage and allocate resources accordingly. Such obligations should extend beyond existing EU minimum standards and be calibrated to each firm’s role in importing, generating, transporting, or supplying energy. ³ ⁴
In shipping, firms should prepare for a more permanent repricing of routes that cross critical chokepoints, higher maritime-insurance premiums, stronger state involvement in securing sea lanes, and the possible normalisation of alternative routes.
A more integrated energy system should be treated as a European public good. Stronger interconnection would reduce dependence on high-risk external suppliers, support the clean-energy transition, and improve industrial competitiveness. These benefits, however, depend on stronger supranational governance, credible solidarity arrangements between member states, fair cost sharing, and the deployment of integrated resilience measures both within private firms and national strategies.
References
- OSW (2026) ‘Excessive dependence: growing role of US LNG and oil in the EU market’. https://www.osw.waw.pl/en/publikacje/osw-commentary/2026-02-04/excessive-dependence-growing-role-us-lng-and-oil-eu-market?utm
- BCG (2026) ‘Strait of Hormuz chokepoint: impacts and future business’. https://www.bcg.com/publications/2026/strait-of-hormuz-chokepoint-impacts-future-business
- BDEW (2026) ‘HIC BDEW Resilienz – Finaler Bericht’ (PDF), p.67. https://www.bdew.de/media/documents/20260707_HIC_BDEW_Resilienz_Finaler_Bericht_EN_1.pdf?utm_source=perplexity#page67
- Brookings (n.d.) ‘System integration: The key to Europe’s energy trilemma’. https://www.brookings.edu/articles/system-integration-the-key-to-europes-energy-trilemma/
