EU Faces €24 Billion Spike in Fossil Fuel Import Costs Amid Iran Conflict and Strait of Hormuz Closure

The war in Iran has sparked an energy crisis in Europe, with the Strait of Hormuz remaining closed to almost all traffic despite an ongoing ceasefire and negotiations to reopen it. The conflict in the Middle East first broke out nearly two months ago, locking up one fifth of the world’s oil and natural gas supply in the Persian Gulf through this critical chokepoint.

In the first 52 days since the conflict started, the EU spent an additional €24 billion (around $28 billion) on fossil fuel imports compared to previous levels, according to calculations from the European Commission.

The European Commission published a report on Wednesday outlining the EU’s strategy to navigate the energy crisis, including measures to regulate energy demand and focus on homegrown sources. This comes four years after Europe experienced a major energy crisis when Russian natural gas flows to the EU slowed to a trickle.

In 2022, the EU designed a major policy package to end dependence on Russian fuel imports, which succeeded in scaling down the share of Russian energy products in the EU's energy mix.

Last month, Dan Jørgensen advised EU member states to implement voluntary demand saving measures to reduce oil and gas use, particularly for transport purposes. EU ambassadors discussed demand destruction during a closed door meeting last week, Reuters reported. Officials argued in the meeting that a prolonged energy crisis would threaten the continent’s energy reserves headed into next winter.

Since Russia’s invasion of Ukraine, the EU has scaled its solar and wind power sector, which last year combined to produce more electricity domestically than fossil fuel sources. The continent itself is a small fossil fuel producer and has historically relied on imports to satisfy most of its energy production needs. 5% of its energy from abroad.