Europe obtains 11% of its LNG and 12% of its oil from Middle East suppliers, while contract structures grant flexibility that can redirect cargoes to the highest global bidder, tying European markets to price volatility beyond its region.

With roughly 90% of LNG through the Strait of Hormuz destined for Asian buyers, any shipping disruption would trigger a global price surge, forcing European utilities to outbid Asia at the margin to refill storage.

Rerouting shipments and higher insurance premiums for tankers and LNG carriers is expected to tighten transport capacity, boosting freight costs and creating additional expense for energy distributors and industrial consumers.

Elevated procurement and logistics costs threaten to dampen Europe’s industrial rebound and add upward pressure to inflation, challenging policy makers’ ability to meet recovery and price stability targets for the remainder of 2026.