Gas Tops €60 on Hormuz Risk

Brent crude settled at $88.10 on 17 July, up roughly 16% in a week (Reuters via Euronext). Europe’s benchmark gas contract, Dutch TTF, pushed through €60/MWh, having been below €45 only days earlier (Investing, Corriere dello Sport). No pipeline into Europe has been cut. No European port is closed. The Strait of Hormuz has not formally shut. Yet households and businesses across Europe are already beginning to feel the price of a risk sitting thousands of kilometres away, at a chokepoint the EU cannot command.

Three Links in the Price Chain

The Strait of Hormuz carries about 20.9 million barrels per day of oil and roughly a fifth of global LNG trade (EIA). Most of that energy goes to Asia, not Europe. But Europe buys oil against Brent and prices gas through TTF, and those benchmarks move before any physical shortage appears. Traders do not wait for refineries to run dry. They price the danger while the ships are still moving.

The mechanism has three parts. First, benchmarks rise when Gulf supply looks vulnerable, so every European importer pays more, even when its cargo comes from elsewhere. Second, insurance costs jump. War-risk cover for a single tanker transit now runs at 3%–10% of hull value, compared with about 0.25% before the conflict (The National, OpsCon). The liability cover shipowners need to sail is still available, but some fixed-premium policies have been cancelled and rewritten at higher rates (LMA). Third, competition tightens. If Qatari LNG cannot reliably leave the Gulf, Asian buyers bid harder for flexible Atlantic cargoes. Europe then has to pay up to refill storage.

Where the Costs Land

Italy is where the disruption is easiest to see. QatarEnergy has declared force majeure on Edison’s long-term LNG contract, blocking 21 cargoes worth 2.7 billion cubic metres between April and early September. Edison has replaced 14 of them, mostly with US supplies (Corriere del Veneto). Italian gas storage is above 70%, far better than the EU average of roughly 52%, but Eni chief executive Claudio Descalzi told parliament the worry is continuity of supply in a market that was already short of slack (ANSA, ANSA).

Greece shows the shipping calculation changing in real time. Tanker transits above 10,000 deadweight tonnes through Hormuz fell to 59 in the week of 6–12 July, from 117 the previous week (OT). Greek-owned tankers have not abandoned the strait, but each sailing is now judged on insurance cost, crew risk and the availability of naval escort. Fewer ships mean higher freight rates, and higher freight feeds straight into the delivered cost of energy.

Hungary exposes a quieter problem. More than 90% of its imported oil and 74% of its gas arrive by Russian pipeline, yet wholesale fuel still rose by 14 Ft/l for petrol. The government pointed to 87 days of strategic reserves to calm the market (Portfolio, Portfolio). Pipeline dependence does not insulate a country from global pricing. It only changes the route by which the shock arrives.

In Poland, Orlen has raised wholesale petrol by 24 groszy/l and diesel by 46 groszy since early July (WNP). Food prices rose only 1.9% year-on-year in June (ING). The rise at the pumps may yet work its way into shop prices, but the evidence is not there for now.

Buffers Without Levers

Europe is not defenceless. The Commission enforces gas storage targets. EU law, through Council Directive 2009/119/EC, requires member states to hold 90 days of oil stocks. That can cushion a price spike, but it cannot end one. EUNAVFOR Aspides, the EU naval mission protecting Red Sea and Gulf shipping lanes, can have its mandate extended if member-state governments agree. New infrastructure will help at the margin: Croatia’s Krk LNG terminal plans to add 1 bcm/year of capacity from early 2027, with eastern European buyers likely to be interested (Bloomberg Adria).

For Ireland, as for the rest of Europe, the lesson is familiar from every energy shock since 2022. Storage, interconnection and alternative suppliers buy time. They do not give Dublin, Rome or Brussels the power to set the global price of gas. No European government can reopen Hormuz, make insurers write cheaper cover, or stop Asian buyers bidding up replacement LNG. EU energy ministers can call it resilience if they like. Their voters will want to know whether it is a strategy, or just the most orderly version of waiting.