Middle East Tensions Spark Fears of Energy Crisis in Europe as LNG Supplies Face Disruption

Mounting tensions in the Middle East have raised alarms across global energy markets, with fears growing that vital natural gas fields could become targets in the ongoing conflict. As the Israel-Iran confrontation deepens, analysts warn that Europe’s liquefied natural gas (LNG) supply — and broader economic stability — could be at risk.

Since Israel launched airstrikes on Iranian military and nuclear sites on June 13, global oil prices have surged more than 10%, triggering fresh concerns about inflation and supply disruptions. The World Bank has already downgraded global economic growth to 2.3% for 2025, with energy instability now compounding trade tensions caused by new U.S. tariffs.

Markets are increasingly pricing in the threat of supply constraints, particularly around the Strait of Hormuz — a narrow but crucial maritime chokepoint through which one-third of global oil and one-fifth of LNG shipments pass. While Iran has not closed the strait, its control of the area and the growing military risks have caused several shipping companies to reroute or cancel trips altogether.

“The Strait of Hormuz is unlikely to close,” said Dr. Yousef Alshammari, President of the London College of Energy Economics, in an interview with Euronews. “Iran depends on it to export to key clients like China and India.” Still, he noted that heightened risk has already driven up costs, with tankers avoiding the route and insurers raising premiums. Qatar, one of the largest LNG exporters globally, has reportedly delayed shipments due to the situation.

Europe, which remains dependent on global LNG amid efforts to move away from Russian gas, is feeling the pressure. Gas prices in the region surged to a three-month high on Friday, with the Dutch TTF benchmark nearing €41 per megawatt-hour. Though current inventories are stable, the EU’s exposure to Qatar — which provides about 10% of its LNG — leaves countries like Belgium, Italy, and Poland particularly vulnerable.

Further strain is expected due to hotter-than-usual weather across Europe, increasing demand for cooling systems and energy. “Spikes in energy prices push up inflation and can influence central bank decisions,” said Alshammari. With the ECB and Bank of England already cautious on rate cuts, persistent inflation could result in prolonged tight monetary policies and suppressed growth.

The conflict is also threatening global oil dynamics. Iran, the world’s ninth-largest oil producer, exports about 1.5 million barrels per day — primarily to China, which depends on Iran for around 10% of its imports. Any disruption could force Beijing to seek alternative suppliers at higher costs, with ripple effects across global prices.

For Europe’s manufacturing sector, already battered by high input costs and rising trade tensions, the energy shock could prove severe. “It’s like playing four-dimensional chess,” said Marco Forgione, Director General of the Chartered Institute of Export and International Trade. He warned of potential consumer price hikes, supply shortages, and shrinkflation if fuel costs remain elevated.

While a full-scale closure of energy routes remains unlikely, markets are on edge, and experts caution that a broader conflict involving European powers could further destabilize the global economy.

“This is the scenario nobody wants to see happen,” Alshammari said.