Europe’s gas market weathers Hormuz crisis as peace deal nears signing

Reuters reported Wednesday that Europe’s gas sector has withstood the Strait of Hormuz disruption, though full supply recovery will take time.reuters
The crisis cost the EU over $35 billion in extra energy imports, with gas prices surging more than 70% at their March peak, according to the European Commission.al-monitor
Analysts warn Europe now faces long-term risks from deepening dependence on U.S. LNG, which accounted for 57% of EU imports in 2025.globallnghub

Europe’s Gas Market Weathers Hormuz Shock but Faces Long-Term Demand Risks

Europe’s natural gas market has emerged from the Strait of Hormuz crisis without a catastrophic supply breakdown, but analysts warn the continent now faces a different set of challenges as it grows increasingly reliant on American liquefied natural gas and confronts structural demand decline.

Relief After Three Months of Disruption

The preliminary peace deal between the United States and Iran, announced on June 15 and set to be formally signed Friday in Switzerland, signals an end to more than three months of conflict that closed one of the world’s most critical energy chokepoints. Dutch TTF gas futures, Europe’s benchmark, have retreated to around €41 per megawatt-hour after reaching peaks above €60 during the crisis, though they remain above pre-war levels near €30.npr

Reuters reported on Wednesday that Europe’s gas sector “has withstood the Hormuz challenge — at least for now,” noting that the peace agreement indicates “the most severe disruptions may be behind us, even if recovery in supply takes time”. The European Commission’s Gas Coordination Group confirmed in late May that EU storage levels could reach 80% by summer’s end, enough to secure supply for the 2026-27 winter season.europa

The Cost of Resilience

The crisis was far from painless. European gas prices surged more than 70% from pre-war levels at their peak in late March, and EU Energy Commissioner Dan Jorgensen warned in May that the disruption had already cost the bloc more than $35 billion in additional energy import costs. Europe managed to avoid physical shortages by ramping up LNG imports from the United States and securing additional pipeline gas from Algeria and Nigeria, while QatarEnergy’s production halt following Iranian drone strikes removed a major LNG supplier from the market.reuters

War-risk insurance premiums and elevated tanker freight rates are expected to keep costs above normal even as the strait reopens.nytimes

Growing US Dependence Raises New Questions

The longer-term concern now centers on Europe’s deepening reliance on American LNG. US supplies accounted for roughly 57% of EU LNG imports in 2025, up from just 5% before Russia’s invasion of Ukraine. Analysts at the Institute for Energy Economics and Financial Analysis project that figure could reach 80% by 2030, a concentration that Deutsche Welle and other outlets have characterized as replacing one energy dependency with another.globallnghub

The Centre for Strategic and International Studies’ OSW think tank noted that this reliance “varies significantly between individual countries” but creates vulnerability to both political leverage and supply disruptions from a single corridor. Meanwhile, Europe’s long-term gas demand is projected to decline as the continent pursues electrification and renewable energy targets — raising questions about whether expensive new LNG infrastructure will become stranded assets.waw