Jorge Costa Oliveira
Europe’s exposure to the current closure by Iran of the Strait of Hormuz (“Hormuz Shock”) is significant, chiefly because it strikes at the heart of the continent’s “new” energy security model adopted after turning away from Russian gas.
While Europe only sources about 4% to 5% of its crude oil directly from the Persian Gulf, its growing reliance on the region for Liquefied Natural Gas (LNG) has created a “decarbonization fragility”. As of April 2026, the instability generated by the “Hormuz Shock” severely affects European families and businesses in various ways.
1. The ‘LNG Trap’. Before 2022, many European countries, most notably Germany, shut down coal and nuclear power plants and relied on natural gas as the main non-intermittent energy source for their energy transition. Since the 2022 energy crisis, Europe has sought to replace stable Russian pipeline gas with globally traded LNG.
• The Qatar factor: Around 20% of global LNG passes through Hormuz, with Qatar being a key supplier to Europe, particularly Germany, Italy, and Belgium.
• Price contagion: Even European countries that source gas from Norway, West Africa, or the United States, are not immune. Reduced Middle Eastern supply to Asia sparks a global bidding war. European benchmark prices (TTF) have already surged from €32/MWh in February to over €60–€70/MWh in early April.
2. Supply chain and transport bottlenecks. The Strait is a chokepoint not only for energy but also for finished goods and raw materials – e.g., fertilizers, helium.
• Logistics inflation: Shipping traffic through Hormuz has dropped by more than 90%. Vessels forced to reroute or await Iranian clearance face steep insurance premiums and higher fuel costs.
• Manufacturing impact: Prolonged instability threatens the “just-in-time” supply chains of Europe’s automotive and chemical industries, which rely on specialized chemicals and components from Asian markets that frequently transit through the region.
3. Limitations of alternative routes. There are no quick fixes for a full closure of the Strait of Hormuz.
• Pipelines: Saudi Arabia’s East–West pipeline and the UAE’s Habshan–Fujairah line can bypass the Strait, but their combined capacity of roughly 3.5 to 5.5 million barrels per day is far short of the 20+ million barrels that normally flow through Hormuz daily.
• Strategic reserves: While the International Energy Agency has moved to release 400 million barrels from emergency oil stocks, these are temporary buffers designed for months, not years, of disruption.
4. Economic risks. The European Commission has warned that although physical supply remains “secured” for now thanks to high storage levels (around 60% remaining after winter), a prolonged closure of the Strait is likely to:
• Fuel inflation: Higher energy costs ripple across the economy, raising prices for a wide range of goods, also acting as a regressive tax on households and industries.
• Drive deindustrialization: Energy-intensive sectors such as steel and fertilizers may be forced to cut production if gas prices remain at current “crisis” levels, equivalent to oil prices above $100 per barrel.
The Bottom Line: While Europe is physically less vulnerable to a total blackout than it was in 2022, it is now more financially and economically exposed to maritime chokepoints. The “Hormuz Shock” has effectively replaced Europe’s former dependence on Russian pipelines with a new and volatile reliance on global shipping routes.
It is in Europe’s interest to take a more proactive stance in pressing the United States to end a war that is illegal under international law, irresponsible due to its manifest unpreparedness, lack of strategy and objectives, and highly damaging to the interests of European families and businesses.
linkedin.com/in/jorgecostaoliveira
No Comments