What if the price of a barrel of oil isn't the real issue? The crisis in Iran has brought our need to accelerate the energy transition back to the forefront of the European agenda. Our expert Pierre-Louis Brenac shares his insights
Summary
The Strait of Hormuz is one of the most strategic chokepoints for global energy trade. A significant portion of oil and liquefied natural gas exports passes through this maritime corridor every day, making its stability a major concern for international markets. Any disruption in this sensitive geopolitical region can lead to higher energy prices, exacerbate pressures on supply chains, and undermine the energy security of many countries.
For players in the energy, industrial, and utilities sectors, dependence on the Strait of Hormuz underscores the importance of diversifying supply sources, ensuring infrastructure resilience, and anticipating geopolitical risks.
Contents
The Need to Rethink Our Long-Term Energy Sovereignty
Recent geopolitical tensions in the Strait of Hormuz have once again highlighted the extreme volatility of commodity markets. The closure of this critical chokepoint for several weeks triggered the usual fluctuations in the price of Brent crude. However, for players in the energy and utilities sectors, this intraday volatility should not obscure the reality of physical flows and the structural changes in our energy system.
As Pierre-Louis Brenac, a partner at iQo, recently noted on Radio Classique, focusing on the fluctuations in the price per barrel is a misdiagnosis.
To develop a long-term resilience strategy and address our energy dependence at its root, policymakers must analyze three underlying dynamics: the inflation transmission mechanism, the seasonality of gas supply security, and the accelerating decline in demand for fossil fuels.
An energy dependency that is reflected in prices rather than in volumes
An analysis of physical flows shows that Europe—and France in particular—has limited direct exposure to physical disruptions in the Strait of Hormuz. The nature of our overall energy dependence is more subtle than a simple threat of a physical disruption:
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: A Focus on Asian Markets Approximately 84% of the crude oil passing through the Strait of Hormuz is destined for Asian markets (China, India, Japan, South Korea). -
Limited direct exposure
Oil passing through this strait accounts for less than 4% of France’s crude oil imports. As for liquefied natural gas (LNG), Qatar supplies approximately 8% of the European Union’s total supply.
The major risk for Europe is not a physical supply disruption (shortage), but a global price shock caused by market arbitrage. Since oil is a fungible commodity, any geopolitical risk premium on Brent is instantly reflected in European price indices.
This phenomenon fuels significant amount of imported inflation , revealing our economy’s vulnerability due to its dependence on fossil fuels.
Rising prices at the pump (which can reach as high as 36% during periods of acute crisis) and persistently high overall inflation in the eurozone are taking a heavy toll on the competitiveness of energy-intensive industries and, in the long run, on households’ purchasing power.
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Energy Security: Using Seasonal Stock Fluctuations to Counter Gas Dependence
For European utilities, the real focus is not on the summer months, but on the winter preparation phase. Reducing our dependence on imported energy—and gas in particular—now hinges on our ability to replenish underground gas storage facilities (UGS) during the spring and summer.
The 2022 precedent: "
"—an indicator of vulnerability
At the end of March 2022, European natural gas stocks stood at just 28% of their maximum capacity, compared with 33.5% the previous year.
This situation had pushed the wholesale markets (particularly the Dutch TTF) to their limits, illustrating the fragility of a system heavily dependent on external supplies.
's Outlook for 2026–2027
If ongoing tensions in the Middle East were to disrupt Qatari LNG shipments during the summer, it would jeopardize the pace at which stocks are built up for the following winter—and even for the 2026–2027 period.
Against this backdrop of tension surrounding LNG, Europe’s long-standing partners are acting as a buffer to mitigate this energy dependence.
Norway, through its national operator Equinor and the Gassco network, proposes to accelerate and optimize its pipeline gas production capacity to offset potential LNG shortfalls and stabilize the European market.
Moving Away from Fossil Fuel Dependence: Accelerating Electrification and Reducing Demand
Every spike in fossil fuel prices acts as an economic catalyst, accelerating a phenomenon well known to energy experts: the destruction of demand. It is the quickest way to reduce our dependence on imported energy.
When fuel and gas prices remain structurally high, consumer behavior adjusts quickly. In France, road fuel consumption fell significantly—by about 12 percent—in May, driven by the combined effect of high prices and incentives to drive more efficiently.
This decline in demand is accompanied by a structural transition toward the electrification of energy use, which is the cornerstone of energy independence. In this regard, France has a major competitive advantage:
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A carbon-free and self-sufficient electricity mix
Thanks to the restored availability of the existing nuclear fleet and the growing share of renewable energy (wind and solar photovoltaic), the carbon intensity of French electricity remains among the lowest in Europe. -
A Gradual Decoupling from Fossil Fuel Markets
The more the national energy mix shifts toward electricity (heat pumps, electric vehicles, decarbonization of industrial processes), the more the national economy breaks free from its dependence on fossil fuels and decouples from geopolitical fluctuations in the Middle East.
Reducing Energy Dependence: The New Strategic Mandate for Utilities
In the face of turmoil in the Strait of Hormuz, energy companies must not let their strategies be swayed by panic in the financial markets. To address the root causes of Europe’s energy dependence, utilities must focus their investments on two operational and strategic priorities:
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Securing and optimizing storage infrastructure
Maximize fill rates as soon as market conditions permit, by diversifying supply sources (notably via the Norwegian gas corridor) to reduce dependence on transit LNG. -
Accelerating projects to electrify end-use sectors
Massively deploy low-carbon technologies and smart grids to permanently reduce dependence on fossil fuel imports, thereby transforming a geopolitical vulnerability into an opportunity for green reindustrialization.
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Frequently Asked Questions
What risks would a blockade of the Strait of Hormuz pose to the energy markets?
The disruption to traffic reduced the supply available on international markets, which in turn automatically led to:
- causes oil and gas prices to rise,
- increases market volatility
- exacerbates tensions in global supply chains.
What risks would a blockade of the Strait of Hormuz pose to the energy markets?
The disruption to traffic reduced the supply available on international markets, which in turn automatically led to:
- causes oil and gas prices to rise,
- increases market volatility
- exacerbates tensions in global supply chains.
Does Europe depend on the Strait of Hormuz for its energy?
Although Europe has diversified its supply sources in recent years, it remains vulnerable to fluctuations in global energy markets. A crisis in the Strait of Hormuz could therefore have repercussions on the continent’s energy prices and security.
Tensions surrounding the Strait of Hormuz highlight the vulnerability of economies dependent on fossil fuels. They underscore the importance of energy diversification strategies, the development of renewable energy, and national energy sovereignty.
How can companies reduce their exposure to geopolitical risks related to energy?
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