Brussels/London, April 7, 2026 — As US President Donald Trump issues a fresh ultimatum to Iran with a Tuesday 8 PM ET deadline to reopen the Strait of Hormuz, Europe is already feeling the severe economic fallout from the ongoing conflict. The effective closure of this critical waterway — which handles around 20% of global oil and significant LNG flows — has triggered a major energy shock across the continent, pushing gas and oil prices sharply higher and raising fears of renewed stagflation.

European Union officials have warned that energy prices will not return to normal levels quickly, even if hostilities ease soon. The crisis comes at a vulnerable time for Europe, with gas storage levels critically low after a harsh winter and lingering effects from the previous energy crunch following Russia’s actions in Ukraine.

Energy Prices Soar: Gas Up 70%, Oil Up 60%

Since the conflict intensified and shipping through the Strait of Hormuz slowed to a near standstill, European benchmark gas prices (TTF) have nearly doubled, reaching over €60/MWh in recent weeks. Oil prices have also surged, with Brent crude climbing above $100 per barrel amid supply disruptions from Qatar’s LNG facilities and broader regional instability.

The EU estimates that the past month alone has added billions of euros to its fossil fuel import bill — around €13-14 billion extra — placing a heavy burden on households, businesses, and energy-intensive industries in countries like Germany, Italy, and the Netherlands.

EU Energy Commissioner Dan Jørgensen stated clearly: “Even if peace is here tomorrow, we will not go back to normal in the foreseeable future.” He highlighted tightening markets for diesel, jet fuel, and electricity, warning of spill-over effects that could derail economic recovery.

Risk of Stagflation and Technical Recession

Economists and the European Central Bank (ECB) have already revised forecasts downward. The ECB postponed planned interest rate cuts, raised its 2026 inflation outlook, and cut GDP growth projections. Energy-dependent economies face a high risk of technical recession if the disruption persists through the critical summer gas storage refill season.

UK inflation is projected to breach 5% this year, while Germany and Italy — major industrial powerhouses — are seen as particularly vulnerable. The combination of higher energy costs, supply chain pressures, and reduced global trade is creating the classic conditions for stagflation: stagnant growth accompanied by rising prices.

Calls are growing within the EU for windfall profit taxes or caps on energy companies to protect consumers and prevent excessive gains amid the crisis.

Broader Impacts on European Economy and Daily Life

• Higher Fuel and Heating Costs: Petrol, diesel, and household energy bills are rising, squeezing family budgets across the continent.
• Industrial Strain: Chemical, manufacturing, and fertilizer sectors face increased production costs, with potential job losses and reduced competitiveness.
• Inflation Ripple Effects: Higher transport and freight costs are feeding into food prices, consumer goods, and services.
• Aviation and Shipping Disruptions: Jet fuel shortages and rerouted shipping are pushing up airfares and import costs.

European leaders have urged restraint and diplomacy, with some expressing concern over potential targeting of civilian infrastructure. The European Council President António Costa stressed that escalation will not bring peace and that any attacks on energy facilities would be unacceptable.

Europe’s Energy Vulnerability Exposed

The crisis underscores Europe’s ongoing dependence on imported fossil fuels and the fragility of global supply chains. After pivoting away from Russian pipeline gas, the continent had increased reliance on LNG from Qatar and other Gulf sources — many of which transit through or are affected by the Hormuz route.

This has reignited debates on accelerating the green transition, investing more in nuclear power, renewables, and domestic energy sources to build long-term resilience. European Commission President Ursula von der Leyen has described the situation as a “stark reminder” of the risks of over-reliance on volatile regions.

What Happens Next?

With Trump’s deadline approaching and Iran remaining defiant, markets remain on edge. A prolonged closure could deepen the pain for Europe, while even a quick resolution may not bring immediate relief due to tight global inventories and the time needed to restart disrupted production and shipping.