Hormuz Attack Lifts EU Gas 35%

Iran says the Strait of Hormuz is closed. The United States says ships are still moving. For Europe, the sharper question is being answered somewhere quieter: in London insurance offices, bank compliance teams and shipowners' boardrooms. That is where the cost of keeping energy moving is now being reset, voyage by voyage.

Iran's Revolutionary Guard struck the GFS Galaxy, a Cyprus-flagged cargo vessel, on July 12, damaging its engine room and leaving one crew member missing (Times of Israel). The Cypriot flag matters. It makes the ship EU-registered, with European crew, legal and liability obligations attached. Tehran then declared the strait closed "until further notice". The US military responded with fresh strikes and said commercial traffic was continuing (SOFX).

The space between those two claims is where European energy prices are being made.

The private veto no government can override

War-risk insurance, the extra cover ships need when sailing through conflict zones, has become the practical choke point. Before the crisis, premiums were roughly 0.25%-0.5% of a vessel's hull value. At the peak, they reached 10% (CNN). Current quotes are around 2%-6%, with fewer owners even asking for cover (Claims Journal). Policies are now being written for seven-day windows, priced only hours before departure.

The sanctions problem may bite harder than the premium itself. The Lloyd's Market Association, which co-ordinates London's dominant marine-insurance market, has warned that paying Iranian port fees or transit charges could expose European financial institutions to sanctions breaches (LMA). US Treasury guidance tells shipping companies to verify where cargo comes from, examine vessel histories and build exit clauses into contracts (Katten). A voyage can become impossible to finance if a bank's compliance desk will not sign it off, even if the sea lane itself is open.

Traffic has recovered, from about 27 transits a day in late June to more than 60 within days (Insurance Asia). Breakwave Advisors reported on July 8 that the latest attacks had not changed shipowners' behaviour (Breakwave Advisors). But insurers do not price yesterday's vessel count. They price the chance that tomorrow's voyage becomes a claim.

Governments can escort convoys, impose sanctions, issue warnings and offer subsidies. What they cannot do is instruct Lloyd's syndicates or bank compliance departments to treat a Gulf sailing as routine.

Price shock, not blackout

Europe's exposure is less about pipes running dry than bills rising. Qatar accounts for nearly 19% of global LNG exports, and all of it passes through Hormuz (IGU). If Qatari cargoes slow, European and Asian buyers compete for replacements. Europe's TTF gas benchmark, the reference price that feeds through to household and industrial energy bills, is already roughly 35% above pre-closure levels (EIA).

Refined products widen the hit. BNP Paribas research found that Asia and the Middle East supplied 23% of European diesel imports and 90% of jet-fuel imports in 2025 (BNP Paribas). A Hormuz disruption does not stop at heating bills. It moves into haulage, aviation and manufacturing.

Ireland will feel that through prices rather than shortages. The energy regulator has stepped up engagement with suppliers after several announced 8%-11% price increases, while diesel pump prices are expected to rise by about 10 cents per litre (Irish Times, RTÉ). Spain shows the same lesson from the other side. Its gas stocks are at 73%, well above the EU average, and it has the bloc's largest regasification capacity (La Voz de Galicia). That physical cushion helps. It does not spare Spanish consumers from a gas price set in the global LNG market, where any Qatari disruption reprices the next available cargo.

The accountability gap

Hormuz is not closed in the simple sense. It is no longer commercially normal. Did the attack on the GFS Galaxy change insurer terms for EU-flagged vessels? Have banks refused payments linked to Hormuz traffic? Were LNG cargoes delayed after the July 6 strikes? The answers sit with Lloyd's syndicates, P&I clubs, which are the mutual insurers covering crew, pollution and collision liability, and compliance departments inside banks.

Those actors do not owe the public a running account of their decisions. Yet Europe's energy bill is now being shaped by judgments no voter authorised and no parliament can properly examine.