Europe’s energy crunch

FOR Europe, conflict in the Middle East is never a distant spectacle. It reaches the continent through shipping lanes, commodity markets and household budgets long before it appears in diplomatic communiqués. US-Iran war has once again reminded European states that their prosperity remains tied to events unfolding thousands of miles away. At the centre of the anxiety lies the Strait of Hormuz, one of the world’s most critical energy arteries. According to the International Energy Agency, around one-fifth of globally traded oil and a substantial share of liquefied natural gas pass through this narrow route. Whenever tensions rise there, markets react instantly. Tanker insurance costs jump, shipping schedules tighten and traders price in future scarcity. Europe may not be the largest direct consumer of Gulf hydrocarbons, but it remains deeply exposed to the consequences of global price shocks. This exposure comes at a particularly fragile moment. Europe has been struggling for the past four years with successive inflationary shocks, beginning with the Ukraine crisis and the sanctions on Russia, which disrupted its long-established energy supply system. Just as the economy remained under pressure, another geopolitical shock has emerged. This is what many economists now describe as a “double crisis”. Europe faces supply insecurity abroad and stagnation at home. Benchmark gas prices surged due to the US-Iran War, while oil markets again began flirting with triple-digit territory. Growth forecasts across the eurozone have weakened, with several institutions warning that expansion in this year could remain below one percent. For households, this means the return of expensive heating, transport and food. For business, it means another year of postponed investment and shrinking margins. No sector feels the pain more than the industry. Manufacturers in Germany, Italy and Central Europe still pay far more for energy than competitors in the US or parts of Asia. Steel plants, ch