The European Union has warned member states of a risk of a prolonged energy shock if the conflict surrounding Iran continues, EU diplomats told Reuters.
According to the European Commission, global energy markets are already under significant pressure due to the war, which has effectively disrupted operations in the Strait of Hormuz, a key route for around 20% of global oil and LNG flows.
While Europe is not yet facing a physical supply shortage, oil and gas prices have risen sharply, and the aviation industry has warned of potential fuel disruptions in the coming weeks.
In a confidential report to EU ambassadors, the European Commission outlined two possible scenarios. In the event of a ceasefire between the United States and Iran and the restoration of supplies through the Strait of Hormuz, prices are expected to begin falling within months, although the LNG market would remain tight until the end of the decade.
If the conflict continues, the EU expects a prolonged supply shock, further price spikes, and the need for “demand destruction” — effectively a cut in fuel consumption across the economy.
In that scenario, difficulties in filling gas storage facilities ahead of the winter season and localised shortages of aviation fuel are also possible. The European Commission is preparing mitigation measures, including reductions in electricity taxes and an acceleration of the transition to clean energy.
By Jeyhun Aghazada
