Hormuz Crisis Could Wreak Havoc on European Energy Supplies

A prolonged Iran war could lead to a severe energy crisis in Europe, resulting in a cold and hungry winter. According to Goldman Sachs analyst Samantha Dart, Europe does not have its usual stockpiles of diesel and fossil gas by this time of year, late summer. This shortage could be exacerbated if the Hormuz crisis continues into 2027.

Fossil gas is used for heating buildings, while diesel powers trucks that deliver food to supermarkets and other essential goods. A shortage of diesel would lead to significant shortages in food and supplies, causing prices to skyrocket. The fertilizer crisis due to the blockade of Hormuz will also contribute to higher food prices this winter.

The International Trade Center has reported a 95% decline in exports of Liquefied Natural Gas from the Gulf in April. Qatar is a major supplier of LNG, accounting for about a fifth of global exports. Iranian drones have taken out 17% of Qatar's LNG production capacity at Ras Laffan.

Diesel prices are already high due to the crisis, but an absolute shortage has been avoided so far by releasing petroleum reserves from government and private companies. However, these reserves have fallen to unhealthy levels in the US, and if trade through Hormuz remains disrupted, European truckers may not be able to find diesel at gas stations this winter.