Europe Braces for Energy Shock as Hormuz Shipping Grinds to Halt

The de facto closure of the world's most critical oil chokepoint is reviving memories of 2022 for European policymakers and energy traders alike

Commercial shipping through the Strait of Hormuz has collapsed to near-zero, with Maersk, Hapag-Lloyd and CMA CGM all suspending operations through the waterway following US and Israeli strikes on Iran that began on 28 February. The effective closure — enforced not by physical blockade but by the withdrawal of war-risk insurance, which has hit six-year highs — is forcing tankers and container vessels to reroute around the Cape of Good Hope, adding weeks to voyage times and injecting fresh volatility into already strained freight markets.

For Europe, the stakes are acute. The bloc sources between 12% and 14% of its liquefied natural gas from Qatar via the strait, and it enters this crisis in a notably weakened position. European gas storage stood at just 46 billion cubic metres at the end of February — down sharply from 60 bcm a year earlier and 77 bcm in 2024. That thin cushion leaves the continent vulnerable to precisely the kind of spot-market competition with Asian buyers that drove prices to crisis levels during 2021 to 2023.

Gas prices spiked roughly 20% on the morning of 2 March, and analysts at Neuberger Berman have warned that a sustained closure lasting a month or more could push European natural gas toward or above those 2022 crisis peaks.

Brussels faces an uncomfortable paradox. The EU was already nine months from a scheduled ban on Russian LNG — yet European buyers have continued snapping up Kremlin cargoes as an insurance hedge. Policymakers now confront the uncomfortable reality that energy diversification, however politically desirable, remains incomplete precisely when it is most needed.

The IEA convened an emergency vote this week on a record drawdown of strategic reserves. Whether that is enough will depend on how long Iran holds its position — and how long Washington wants it to.