Nawar Samad

The Strait of Hormuz crisis is no longer perceived in Europe as just a far-off event, but rather is coming to be seen as a direct test of the continent’s ability to withstand shocks in the gas market now that it has reduced its reliance on Russia. Since February 28, 2026, European gas futures (TTF) have risen sharply—from <a href="https://www.investing.com/news/stock-market-news/ubs-sees-resilience-in-european-utilities-despite-surge-in-gas-prices-4554026" rel="noopener noreferrer" target="_blank">€32 per megawatt-hour</a> (equivalent to approximately $9.4 per million British thermal units) to over <a href="https://legrandcontinent.eu/fr/2026/03/02/le-prix-du-gaz-bondit-de-50-en-europe-suite-a-larret-de-la-production-de-gnl-au-qatar/" rel="noopener noreferrer" target="_blank">€48</a> on March 2, and then to around €59 on March 3, marking an increase of <a href="https://www.touteleurope.eu/economie-et-social/guerre-en-iran-le-prix-du-gaz-a-presque-double-en-europe-depuis-le-debut-des-frappes-israelo-americaines/" rel="noopener noreferrer" target="_blank">84.4%.</a> By March 18, prices had stabilized at <a href="https://legrandcontinent.eu/fr/2026/03/19/face-a-une-hausse-de-70-des-prix-du-gaz-depuis-le-debut-de-la-guerre-en-iran-les-dirigeants-europeens-se-reunissent-a-bruxelles/" rel="noopener noreferrer" target="_blank">approximately €54 per megawatt-hour.</a>Key DriversRecent developments indicate that the rise in European gas prices is not attributable to a single factor, but rather to the interaction of multiple variables linked to market structure and global supply dynamics:1. Disruption of a Critical Hub in the Global LNG Market: The most immediate driver of the price surge was the Iranian attack on Qatar Energy’s Ras Laffan facilities on March 2, 2026, followed by Qatar’s announcement of a halt in LNG production. The site accounts for roughly <a href="https://www.reuters.com/business/energy/qatars-role-global-gas-market-2026-03-19/" rel="noopener noreferrer" target="_blank">20% of global LNG</a> trade passing through the Strait of Hormuz.The situation worsened after Qatar declared <a href="https://www.reuters.com/business/energy/qatarenergy-declares-force-majeure-lng-shipments-2026-03-04/" rel="noopener noreferrer" target="_blank">force majeure</a> on March 4 regarding its contractual supply obligations—an exceptional step indicating that the disruption was not just a temporary security incident, but rather a formal inability to meet contractual commitments. Markets accordingly treated the event as a significant disruption to global supply. This pushed European gas contracts traded at the Dutch Title Transfer Facility (TTF)—the main benchmark for gas pricing in Europe—<a href="https://www.reuters.com/markets/commodities/europes-skimpy-gas-storage-under-scrutiny-qatar-halts-lng-flows-2026-03-03/" rel="noopener noreferrer" target="_blank">sharply higher</a>.2. Low European Storage Levels at the Onset of the Crisis: The crisis coincided with a particularly sensitive moment for Europe, as gas storage levels were already critically low. Reserves had fallen below <a href="https://fr.euronews.com/business/2026/03/03/les-prix-du-gaz-presque-doubles-leurope-se-prepare-aux-chocs-energetiques-de-la-guerre-ave" rel="noopener noreferrer" target="_blank">30%</a> of storage capacity by the end of February 2026, with projections suggesting a further decline to between <a href="https://www.bfmtv.com/economie/entreprises/energie/la-part-du-gnl-dans-l-approvisionnement-en-gaz-de-l-europe-doit-passer-de-19-a-45-en-2026-les-stocks-risquent-de-ne-pas-etre-remplis-pour-l-hiver-prochain-a-cause-du-conflit-au-moyen-orient_AV-202603050615.html" rel="noopener noreferrer" target="_blank">22%</a> and 27% by the end of March—compared to a five-year average of approximately <a href="https://www.bfmtv.com/economie/entreprises/energie/la-part-du-gnl-dans-l-approvisionnement-en-gaz-de-l-europe-doit-passer-de-19-a-45-en-2026-les-stocks-risquent-de-ne-pas-etre-remplis-pour-l-hiver-prochain-a-cause-du-conflit-au-moyen-orient_AV-202603050615.html" rel="noopener noreferrer" target="_blank">41%</a> for the same period.This situation heightened market anxiety, as any external shock is assessed not only in terms of current supply but also in terms of the difficulty of replenishing storage ahead of the next winter. In this context, European Energy Commissioner Dan Jørgensen warned that large-scale LNG purchases to refill storage in a short period could <a href="https://www.lefigaro.fr/conjoncture/guerre-au-moyen-orient-ou-et-comment-le-gaz-est-il-stocke-en-france-20260323" rel="noopener noreferrer" target="_blank">drive prices even higher</a> rather than contain them.3. Intensifying Asian Competition for LNG Cargoes: Qatar accounted for <a href="https://www.reuters.com/markets/commodities/europes-skimpy-gas-storage-under-scrutiny-qatar-halts-lng-flows-2026-03-03/" rel="noopener noreferrer" target="_blank">around 7%</a> of the European Union’s LNG imports in 2025, while approximately <a href="https://www.lefigaro.fr/conjoncture/guerre-en-iran-l-europe-exposee-par-sa-dependance-persistante-aux-importations-de-gaz-20260304" rel="noopener noreferrer" target="_blank">3% of total European gas imports</a> transit through the Strait of Hormuz. Although this share might appear limited, that does not mean that Europe remains unaffected by the strait’s closure, as European supply interacts with regional dynamics as a whole: namely, the fact that more than <a href="https://www.lefigaro.fr/conjoncture/guerre-en-iran-l-europe-exposee-par-sa-dependance-persistante-aux-importations-de-gaz-20260304" rel="noopener noreferrer" target="_blank">80%</a> of oil and gas produced in the Gulf—much of which passes through Hormuz—is directed <a href="https://www.lefigaro.fr/conjoncture/guerre-en-iran-l-europe-exposee-par-sa-dependance-persistante-aux-importations-de-gaz-20260304" rel="noopener noreferrer" target="_blank">toward Asian</a> markets.With Qatari supplies disrupted, European prices rose as the continent entered into direct competition with Asian buyers, who are larger and more structurally dependent on Gulf energy. This led to some LNG cargoes being diverted toward Asia, further tightening supply in Europe. By March 7, at least four LNG tankers previously en route to ports in France, Belgium, and Spain &nbsp;had unexpectedly <a href="https://www.lemonde.fr/economie/article/2026/03/07/avec-la-hausse-du-prix-du-gaz-l-europe-est-face-a-la-menace-d-un-choc-energetique_6669849_3234.html?search-type=classic&amp;ise_click_rank=5" rel="noopener noreferrer" target="_blank">changed course toward Asian destinations</a>, according to shipping data from Kpler.4. Limited Availability of Rapid Substitutes: Prices have also increased because available alternatives in global markets have been unable to compensate quickly for the shortfall. Norway, now Europe’s leading gas supplier following the Ukraine crisis, is already operating at <a href="https://www.bfmtv.com/economie/entreprises/energie/la-part-du-gnl-dans-l-approvisionnement-en-gaz-de-l-europe-doit-passer-de-19-a-45-en-2026-les-stocks-risquent-de-ne-pas-etre-remplis-pour-l-hiver-prochain-a-cause-du-conflit-au-moyen-orient_AV-202603050615.html" rel="noopener noreferrer" target="_blank">near full capacity</a>. Additional pipeline supply from Algeria and other countries remains limited, while storage replenishment during summer depends primarily on LNG imports.As a result, Europe lacks a reserve supplier capable of stabilizing prices without significant cost, leaving the market exposed to tight global supply conditions.5. Continued Link Between Electricity Prices and Gas Costs: The crisis has had amplified effects because electricity prices in several European markets remain closely tied to gas prices, despite the growth of renewable energy. In Italy, for example, gas continues to be the main determinant of electricity pricing.Estimates indicate that <a href="https://legrandcontinent.eu/fr/2026/03/27/malgre-une-part-important-de-renouvelable-dans-le-mix-electrique-europeen-le-gaz-contribue-a-la-volatilite-des-prix/" rel="noopener noreferrer" target="_blank">between February 27 and March 25, 2026</a>, electricity prices rose by approximately 30% in Italy, 25% in Germany, and 46% in France. This demonstrates how quickly the gas shock rippled through to electricity bills, exacerbating the overall impact of rising prices.Broader ImplicationsThese developments point to wider implications that extend beyond immediate price effects, highlighting deeper structural challenges related to European energy security:1. Continued Exposure to Global Market Volatility: Although Europe has successfully reduced its dependence on Russian gas, the crisis reveals that Europe has not yet eliminated its external energy dependency—particularly on natural gas and LNG—but has instead redistributed it geographically.The European Union still relies on external sources for <a href="https://theconversation.com/du-detroit-dormuz-a-leurope-comprendre-la-rapidite-de-la-propagation-de-linsecurite-energetique-278591" rel="noopener noreferrer" target="_blank">approximately 58% of its total energy needs</a>, importing over <a href="https://theconversation.com/du-detroit-dormuz-a-leurope-comprendre-la-rapidite-de-la-propagation-de-linsecurite-energetique-278591" rel="noopener noreferrer" target="_blank">90% of its oil</a> and between <a href="https://theconversation.com/du-detroit-dormuz-a-leurope-comprendre-la-rapidite-de-la-propagation-de-linsecurite-energetique-278591" rel="noopener noreferrer" target="_blank">80% and 90% of its gas</a>. European Commission President Ursula von der Leyen described the estimated €6 billion increase in energy costs resulting from the crisis as "<a href="https://www.lemonde.fr/economie/article/2026/03/17/face-a-la-flambee-des-prix-de-l-energie-le-desarroi-et-les-desaccords-des-europeens_6671586_3234.html?search-type=classic&amp;ise_click_rank=9" rel="noopener noreferrer" target="_blank">the price of our dependency</a>."2. Increasing Complexity of Storage Policy Under Price Pressure: The crisis demonstrates that gas storage is no longer merely a technical issue, but has become part of price management itself. While EU regulations set a target of filling gas storage facilities to <a href="https://fr.euronews.com/my-europe/2026/03/23/lue-assouplit-ses-objectifs-de-stockage-de-gaz-en-raison-de-la-guerre-au-moyen-orient" rel="noopener noreferrer" target="_blank">90% of storage capacity by November 1 each year</a>, in March 2026 Commissioner Dan Jørgensen called for flexibility mechanisms to allow the target to be lowered to <a href="https://www.lemonde.fr/economie/article/2026/03/23/crise-energetique-en-europe-les-lecons-incompletes-de-la-guerre-en-ukraine_6673861_3234.html?search-type=classic&amp;ise_click_rank=21" rel="noopener noreferrer" target="_blank">80% under difficult conditions</a>—and even lower in exceptional cases—to avoid triggering further price increases.The objective is not to abandon the 90% target, but to reduce market pressure by spreading purchases over longer periods in a more coordinated manner.3. Shifting Dependency from Russian Gas to U.S. LNG: The crisis highlights that reducing reliance on Russian gas has been accompanied by increased dependence on the United States, which now supplies approximately <a href="https://www.franceinfo.fr/monde/usa/droits-de-douane/les-europeens-sont-ils-vraiment-dependants-du-gaz-americain_7895546.html" rel="noopener noreferrer" target="_blank">60%</a> of Europe’s LNG imports and serves as a key flexible supplier in times of disruption.In this context, energy has evolved from a commodity into a tool of political and commercial negotiation between Washington and Brussels. U.S. Ambassador to the EU Andrew Puzder <a href="https://www.ft.com/content/6bf153e4-11af-44d5-9d1c-48b5c7ad26ef?syn-25a6b1a6=1" rel="noopener noreferrer" target="_blank">signaled that Europe’s privileged access to U.S. gas</a> could be reconsidered if the Turnberry Agreement—signed on July 27, 2025 between Donald Trump and Ursula von der Leyen—is not implemented. The agreement includes 15% U.S. tariffs on most European exports in exchange for EU commitments to purchase <a href="https://www.lefigaro.fr/conjoncture/washington-menace-l-ue-de-couper-son-acces-au-gnl-americain-si-elle-ne-ratifie-pas-l-accord-sur-les-droits-de-douane-20260324" rel="noopener noreferrer" target="_blank">$750 billion</a> worth of U.S. energy by 2028.4. Reinforcing the Importance of the Energy Transition in Europe: The Strait of Hormuz crisis has demonstrated that the energy transition is no longer viewed in Europe merely as a long-term climate project, but rather as a practical means of reducing exposure to shocks in imported gas. Importantly, the crisis has not prompted European institutions to reconsider this roadmap, but instead has reinforced their commitment to it.On March 19, 2026, the European Council reaffirmed that the energy transition remains "<a href="https://www.lemonde.fr/planete/article/2026/03/27/guerre-en-iran-frein-ou-accelerateur-de-la-transition-energetique-en-europe_6674466_3244.html?search-type=classic&amp;ise_click_rank=12" rel="noopener noreferrer" target="_blank">the most effective strategy</a>" for enhancing energy independence and reducing oil and gas prices, while calling for an accelerated deployment of renewable energy.In the same vein, Ursula von der Leyen recommended "staying the course," noting that the war had added approximately €3 billion to Europe’s fuel import bill <a href="https://www.lemonde.fr/planete/article/2026/03/27/guerre-en-iran-frein-ou-accelerateur-de-la-transition-energetique-en-europe_6674466_3244.html?search-type=classic&amp;ise_click_rank=12" rel="noopener noreferrer" target="_blank">in just 10 days</a>.From this perspective, renewable energy expansion, grid development, decoupling electricity prices from gas price volatility, and improving energy efficiency are no longer merely environmental tools, but have become essential instruments for protecting the European economy from recurring price shocks.5. Deepening Divisions Within Europe Over Responses to the Energy Shock: The Strait of Hormuz crisis has shown that the risk extends beyond rising prices to include growing divisions among European countries over how to respond. Rather than converging on a unified approach, EU member states have split between those calling for rapid measures to ease prices—even if this entails modifying certain market rules—and those insisting that any response should remain temporary and not come at the expense of the EU’s long-term strategic objectives.In this context, on <a href="https://www.lemonde.fr/economie/article/2026/03/17/face-a-la-flambee-des-prix-de-l-energie-le-desarroi-et-les-desaccords-des-europeens_6671586_3234.html?search-type=classic&amp;ise_click_rank=9" rel="noopener noreferrer" target="_blank">March 11, 2026</a>, Italian Prime Minister Giorgia Meloni called for an "urgent suspension" of the EU carbon market (the Emissions Trading System), arguing that it contributes to higher electricity prices. Several Central and Eastern European countries, including Poland, expressed similar positions, while the stance of German Chancellor Friedrich Merz remained unclear.By contrast, the European Commission—with the backing of Ursula von der Leyen—emphasized the need for "targeted and temporary measures" while maintaining its commitment to expanding renewable energy. Meanwhile, French President Emmanuel Macron linked part of the solution to restoring freedom of navigation in the Strait of Hormuz, noting on <a href="https://www.lemonde.fr/international/article/2026/03/17/detroit-d-ormuz-les-europeens-refusent-d-etre-entraines-dans-la-guerre-americano-israelienne-contre-l-iran_6671546_3210.html" rel="noopener noreferrer" target="_blank">March 9, 2026</a> that any effort to establish a European or international maritime coalition would only become feasible after the most intense phase of the conflict has passed.6. Renewed Debate in Europe Over Relations with Russia: The crisis has introduced a new dimension to Europe’s energy relationship with Russia. On the one hand, it has given some European voices—particularly in <a href="https://www.lemonde.fr/economie/article/2026/03/17/face-a-la-flambee-des-prix-de-l-energie-le-desarroi-et-les-desaccords-des-europeens_6671586_3234.html?search-type=classic&amp;ise_click_rank=9" rel="noopener noreferrer" target="_blank">Hungary and Slovakia</a>—an opportunity to question the feasibility of a complete phase-out of available Russian energy. On the other hand, it has prompted the European Commission and the International Energy Agency to adopt a firmer stance in rejecting any such shift.Dan Jorgensen emphasized that the current situation constitutes "<a href="https://www.lemonde.fr/economie/article/2026/03/26/dan-jorgensen-commissaire-europeen-a-l-energie-il-est-envisageable-de-plafonner-le-prix-du-gaz_6674340_3234.html?search-type=classic&amp;ise_click_rank=1" rel="noopener noreferrer" target="_blank">a price crisis, not a supply crisis</a>," and that phasing out Russian gas by the end of 2027 remains achievable. Fatih Birol went <a href="https://www.lemonde.fr/economie/article/2026/03/07/avec-la-hausse-du-prix-du-gaz-l-europe-est-face-a-la-menace-d-un-choc-energetique_6669849_3234.html?search-type=classic&amp;ise_click_rank=5" rel="noopener noreferrer" target="_blank">further</a>, arguing that treating Russia as an alternative in light of the Middle East crisis would be "economically and politically misguided." Meanwhile, German Energy Minister Katherina Reiche <a href="https://www.lemonde.fr/economie/article/2026/03/17/face-a-la-flambee-des-prix-de-l-energie-le-desarroi-et-les-desaccords-des-europeens_6671586_3234.html?search-type=classic&amp;ise_click_rank=9" rel="noopener noreferrer" target="_blank">stressed</a> that returning to Russian gas would amount to "a return to a state of complete insecurity."Accordingly, while the current crisis does not restore Russia’s former role as Europe’s primary gas supplier, it does bring underlying divisions within Europe over this issue back into focus.ConclusionRecent developments in the Middle East underscore that European energy security is not determined solely by the availability of supply, but also by Europe’s ability to prevent external crises from becoming instruments of economic and political pressure.From this perspective, reducing dependence on a single supplier is insufficient so long as Europe has not completed a structural shift from diversifying suppliers to reducing its underlying exposure. The priority going forward, therefore, lies in building structural resilience through flexible storage, accelerating electrification independent of gas, and strengthening the capacity for faster political responses to energy shocks.

Implications of the Strait of Hormuz Crisis for Gas Prices in Europe