Hormuz Strike Pushes Oil Past $90

The Kuwaiti tanker Kaifan was hit by a projectile near Oman on Monday, forcing the crew to abandon ship. Brent crude moved above $90 (OilPrice). The strike comes after a month of escalating US-Iran exchanges around the Strait of Hormuz, the narrow passage that carries about 20 million barrels of oil a day and roughly a fifth of global LNG trade (EIA).

For Europe, the first hit is not likely to be empty petrol stations or missing gas cargoes. It is the quieter machinery of energy prices: freight, war-risk insurance and benchmarks. Those are the channels that turn a strike in the Gulf into dearer gas, power and fuel across the continent, including in countries that do not buy directly from Iran.

From strait to bill

Europe does not need Iranian oil to be exposed to Hormuz. The point is that ships, insurers and traders price risk before any cargo disappears. War-risk insurance for a single Hormuz transit has risen from about 0.125% to as much as 1% of a vessel's hull value, while rates for very large crude carriers have roughly quadrupled (Eightx, LMA).

The ships are still moving. But every voyage is now more expensive, and those costs are folded into the delivered price of crude, LNG and refined products when they reach European ports. A physical disruption starts when cargoes stop. The cost shock has already begun.

Half-empty tanks at the wrong time

The timing could hardly be more awkward. EU gas storage was roughly half full in mid-July, well below the 90% target member states must reach by 1 November under EU rules (Gas Outlook, European Commission). ACER, the EU energy regulator, has warned that Europe may need about 13% more LNG imports than last year to hit that deadline (Enerdata).

That matters because refill season is when European buyers are already in the market for cargoes. A Gulf shock forces them to bid harder for replacement supply. The Dutch TTF, Europe's main gas-price benchmark, then carries that competition into contracts and bills well beyond the countries directly buying the gas.

The pass-through is already visible. Germany's BDEW, the energy industry association, reported spot gas at 57.8 €/MWh, a 30-day average power price of 113 €/MWh and national storage at just 45.2% on 18 July (BDEW). In Italy, gas produces about 45% of electricity and often sets the marginal power price, meaning a gas benchmark shock becomes an electricity-bill shock for households that would never think about tanker routes (ANSA).

Terminals help with supply, not with price

Some countries are better placed than others. Spain gets 34% of its gas from Algeria through the Medgaz pipeline, which avoids Hormuz entirely, and it has the EU's largest regasification network, with seven plants (El Mundo). That gives Madrid more options than most.

But infrastructure does not make a country immune to price. Spain's own gas benchmark has already traded at a premium to TTF as tight LNG supply and heatwave demand pushed prices higher (S&P Global). Pipelines and terminals help keep supply moving. They do not seal off an economy from global benchmark prices.

Greece shows the split between winners and losers more sharply. Two Greek-owned tankers were hit in the Hormuz zone (Kathimerini). At the same time, the wider Greek economy drew 25.4% of its energy-product imports from Gulf countries in 2023-2025, four times the EU average of 6.6%, according to analysis cited by OT. Greek shipowners can earn more from higher freight rates. Greek consumers pay more for fuel and power.

Europe spent three years after Russia's gas cutoff replacing pipeline supply with seaborne LNG, Norwegian flows and North African pipelines (Bruegel). That reduced Moscow's leverage. It also left Europe more exposed to shipping lanes, insurance markets and competition for cargoes, which is exactly how the Hormuz shock is now reaching European bills.

National governments can subsidise bills and coordinate emergency oil releases through the IEA, the International Energy Agency that pools strategic reserves among wealthy democracies. The EU sets storage targets, but it does not set household energy prices. Each member state decides how much of the pain is passed on.

A physical shortage remains unlikely if any disruption is short. The more immediate problem is that Europe is refilling its reserves at crisis prices. The buffer may hold. The harder question is who pays when it does.