Dutch TTF natural gas futures — Europe’s benchmark price — hit €50 per megawatt-hour on Thursday morning, up 60% since US and Israeli strikes on Iran closed the Strait of Hormuz.
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The move is the continent’s sharpest energy shock since the 2022 crisis, and it is landing on a market that was already dangerously exposed: gas inventories across Europe stand at their lowest seasonal levels in years.
With the strait — which carries roughly a fifth of the world’s oil trade — still closed, economists and energy analysts warn that even a brief disruption could inflict damage on European growth, push inflation back above target and potentially force the European Central Bank (ECB) to revisit interest rate paths they had only recently stabilised.
Why the Strait of Hormuz matters for Europe
Around 20% of global oil supply and roughly one-fifth of global liquefied natural gas (LNG) trade pass through the strait, making it one of the most strategically important energy corridors in the world.
For Europe, the stakes are considerable. Qatar supplies approximately 15% of the continent’s total LNG imports, making unimpeded passage through the strait a matter of energy security.
Europe’s exposure to Gulf energy flows has increased considerably since the continent dramatically reduced imports of Russian fossil fuels after 2022.
Bridget Payne, head of energy forecasting at Oxford Economics, said trade disruption rather than lost production is currently the primary concern.
She estimates oil supply could be disrupted by around 4 million barrels per day over the coming quarter.
While Gulf producers have spare capacity to offset Iranian supply losses, Payne warned that alternative shipping routes can only handle about one-third of the oil normally passing through Hormuz.
Europe entered March with unusually low gas storage levels. Inventories across the continent stood at roughly 30%, with Germany — Europe’s largest economy — reporting reserves as low as 21.6%.
Oxford Economics warned that disruptions to Qatari LNG exports could force Asian buyers to compete more aggressively with Europe for cargoes, potentially making it harder for European countries to refill gas storage ahead of next winter.
Inflation and growth risks rising
Higher energy prices are expected to feed through into inflation across Europe.
“Europe’s depleted gas stores and reliance on transport routes via the Middle East point to heightened risks of a larger inflationary supply shock. That could become an additional drag on our already below-consensus forecast for 2026 GDP growth,” said Oliver Rakau, chief Germany economist at Oxford Economics.
Oxford Economics expects the conflict to raise eurozone headline inflation by 0.3–0.5 percentage points in 2026, pushing it to around 2.3%.
Higher energy costs could also reduce household purchasing power, trimming economic growth.
Rakau estimates the shock could lower eurozone GDP growth by around 0.1 percentage points to roughly 1.0% this year.
Economists at Goldman Sachs said the conflict in Iran has already prompted revisions to their forecasts for economic growth, inflation and central bank policy.
“We are making changes to our growth, inflation and central banks forecasts in light of the evolving conflict in the Middle East,” said Sven Jari Stehn, chief European economist at Goldman Sachs.
Goldman Sachs also estimates that higher energy prices would trim economic growth by 0.1 to 0.2 percentage points this year across the eurozone, the United Kingdom, Sweden and Switzerland.
However, the outlook could deteriorate if energy prices rise more sharply or remain elevated for longer.
In a downside scenario, oil prices could remain near $80 (€74) per barrel while gas prices stay around €70 per megawatt-hour, according to the bank’s estimates.
In a severe scenario, oil could reach $100 (€92) per barrel and gas €100 per megawatt-hour.
In more severe scenarios, the impact could be much larger.
Headline inflation by late 2026 could be nearly two percentage points higher in a downside scenario and as much as 3.6 percentage points higher in a severe shock.
Goldman said it would expect the ECB to deliver two 25 basis point rate hikes in the second half of 2026 in the severe downside scenario, should energy price increases generate significant second-round effects on core inflation.
Logistics disruptions add pressure
The war is also disrupting global logistics networks, adding further uncertainty for European trade.
According to Freightos research head Judah Levine, military strikes and retaliatory attacks in the region have already forced several shipping companies to suspend bookings to Persian Gulf ports.
“The US-Israel strikes on Iran and subsequent Iranian retaliation are driving significant logistics disruptions in the region which could start to be felt more broadly if the conflict stretches on,” said Levine.
The Strait of Hormuz handles approximately 2% to 3% of global container volumes, and around 100 container vessels are currently stranded in the Persian Gulf.
Some of the world’s largest carriers, including Hapag-Lloyd and MSC, have halted bookings to and from Gulf ports, while CMA CGM has stopped accepting shipments to the region entirely.
The crisis has also revived concerns about the Red Sea.
The Houthis, who paused attacks on commercial vessels in October, have threatened to resume strikes, prompting the few carriers who had returned to that route to divert back around the Cape of Good Hope, further increasing transport costs.
Meanwhile, disruptions to major Gulf aviation hubs have reduced global air cargo capacity.
Qatar Airways Cargo, Emirates SkyCargo and Etihad together account for roughly 13% of global air freight capacity and play a key role in connecting Asia and Europe.
With many flights grounded and regional airspace closed, freight forwarders are beginning to charter direct flights between Asia and Europe, a shift that is already pushing up transport costs.
Freight rates from Southeast Asia to Europe have risen more than 6% in recent days, according to the Freightos Air Index.
Currency markets reflect rising risk aversion
Financial markets are also reacting to the geopolitical uncertainty.
European currencies have weakened as investors move toward safe-haven assets such as the US dollar and gold.
According to Michał Jóźwiak, market analyst at financial services firm Ebury, the euro has fallen about 1.8% against the dollar since the conflict intensified.
The sell-off has been even more pronounced in Central and Eastern Europe.
The Hungarian forint has weakened nearly 5% against the dollar, while the Polish zloty has dropped around 3.5%, marking one of the sharpest weekly moves since the start of the Ukraine war in 2022.
Further weakness in European currencies could also amplify inflationary pressures by increasing the cost of imports.
A fragile energy balance
For Europe, the unfolding conflict underscores the vulnerability of its post-Russia energy model.
While the continent has significantly reduced its reliance on Russian pipeline gas since 2022, much of that supply has been replaced by seaborne LNG.
This shift has made Europe more exposed to disruptions along global shipping routes and to geopolitical tensions in key transit regions such as the Middle East.
With gas inventories already low and the seasonal refilling of storage facilities under way, any prolonged disruption to energy flows from the Gulf could quickly ripple through European markets and economies.
