Global energy markets are experiencing their third major shock in four years after US and Israeli strikes on Iran led to the near closure of the Strait of Hormuz, causing prices to surge and exposing Europe’s vulnerabilities amid limited storage and slow renewables deployment.
Within hours of U.S. and Israeli strikes on Iran on 28 February 2026, global energy markets convulsed: Brent crude raced toward $110 a barrel, European natural gas futures roughly doubled to about €55–58 per megawatt hour, and UK two‑year gilt yields jumped 37 basis points in a single session. Those moves mark Europe’s third major energy shock in four years, and policymakers now confront a pattern in which each disruption inflicts larger fiscal and monetary damage than the last.
The immediate trigger has been the effective closure of the Strait of Hormuz, the chokepoint that handles roughly 20% of seaborne oil and a comparable share of global LNG exports from Qatar and the United Arab Emirates. According to reporting by the Associated Press, tanker traffic through the strait slowed to a near standstill after the opening strikes, prompting renewed fears of prolonged supply interruptions and sparking warnings from some analysts that oil could reach as high as $150 a barrel if the passage remains blocked.
Europe’s particular vulnerability lies in liquefied natural gas. The continent entered the crisis with materially less storage than in prior years , gas inventories were around 46 billion cubic metres at the end of February 2026, down from about 60 bcm a year earlier and 77 bcm in 2024 , leaving buyers exposed to volatile spot markets and competition from Asian importers. Industry modelling and renewables advocacy groups agree that higher shares of wind and solar reduce average wholesale power prices over time, but those gains have not eliminated the transmission of global gas price spikes into electricity costs, particularly under market designs that still price power off marginal gas units during stress periods.
Economic forecasters are already quantifying the fallout. Oxford Economics projects inflation in both the UK and the eurozone will be roughly 0.5 percentage points higher by year‑end under a modest shock scenario. The National Institute of Economic and Social Research models a wider set of outcomes, finding a temporary disturbance could push UK inflation about 0.3 percentage points above baseline, while a persistent one‑year shock of 30% for oil and 50% for gas might raise UK inflation by roughly 0.7 percentage points in 2026 and force interest rates about 0.8 percentage points higher than otherwise, with GDP trimmed by 0.2% in 2026 and a further 0.3% in 2027.
Those inflationary effects complicate central bank policy. The European Central Bank and the Bank of England had begun edging toward easing after inflation eased in 2025; markets were pricing in rate cuts earlier this year. The new supply shock has suspended that trajectory , market prices briefly put the probability of a Bank of England hike by December 2026 at around 57% during the early March rout , and economists warn the shock creates a trap in which external, supply‑driven inflation constrains the ability of monetary authorities to loosen policy in response to weakening growth.
Fiscal space is also thinner than in earlier episodes. Governments that deployed large cost‑of‑living interventions in 2022 did so from a lower starting point for debt servicing and interest rates. The UK’s Office for Budget Responsibility has already lowered its growth outlook for 2026 and scheduled consolidation backloaded to 2029–30, while defence and demographic pressures are crowding discretionary budgets across the continent. Prime Minister Keir Starmer told reporters on 9 March that his government was assessing options to limit the impact of rising energy costs, but markets have signalled scepticism: UK gilts underperformed other core European sovereign debt in the immediate aftermath of the conflict, and sterling slid sharply against the dollar, reflecting investor concerns that further household support would boost borrowing.
Multilateral short‑term responses are being discussed. EU finance ministers met in Brussels in early March to consider coordinated measures, and France’s economy minister said G7 counterparts had agreed in principle to deploy tools, including potential strategic reserve releases. The International Energy Agency announced a large emergency release , 400 million barrels of oil stocks , aimed at calming markets, an intervention documented in Associated Press coverage. Such releases can blunt spikes but are not substitutes for structural reductions in import dependence if the disruption endures.
The human and geopolitical toll of the confrontation deepens the economic calculus. Reporting by the AP and other outlets describes intense hostilities across the region, a rising death toll and widespread displacement, complicating any rapid restoration of stable shipping through the Gulf. That humanitarian and strategic context reduces the likelihood that market volatility will be resolved purely by oil stock releases or short‑term policy measures.
Europe’s partial diversification since 2022 has delivered tangible benefits , renewables capacity has expanded, and system‑level modelling from sector bodies shows a renewables‑led pathway is the lowest‑cost long‑run option even after accounting for grids, storage and backup. Yet a suite of persistent regulatory obstacles slows deployment: unclear legal frameworks, weak remuneration for flexibility services, permitting bottlenecks, grid‑connection delays and financing gaps for smaller developers, issues highlighted by OECD analysis. Where national execution lags, projects move slowly from pipeline to operation, prolonging exposure to global fossil fuel price signals.
The policy choice is increasingly stark. Repeated cycles of external shocks followed by emergency fiscal interventions and accumulated debt are becoming unsustainable. Faster build‑out of domestic generation, storage and interconnectors would progressively blunt the transmission of global gas and oil volatility into European retail markets. Absent accelerated structural change, the next external disruption risks inflicting fiscal and monetary pain at least as severe as the current episode, on a public finance and central‑banking landscape with steadily less room to manoeuvre.
- https://energynews.biz/europes-energy-shock-cycle-is-becoming-structurally-unaffordable-hormuz-disruption-proves-it/?utm_source=rss&utm_medium=rss&utm_campaign=europes-energy-shock-cycle-is-becoming-structurally-unaffordable-hormuz-disruption-proves-it – Please view link – unable to able to access data
- https://apnews.com/article/7303e4593d62c2dee899489571cb0548 – In February 2026, U.S. consumer inflation held steady at 2.4% year-over-year, with core inflation at 2.5%, the lowest in five years but still above the Federal Reserve’s 2% target. However, this data does not reflect the economic impact of the U.S.-Israeli attack on Iran on February 28, which caused oil prices to spike due to disruptions in Persian Gulf shipping lanes. Gas prices have since surged and could push monthly inflation up to 0.9% in March, the highest in four years. Some oil analysts warn prices may reach $150 per barrel if the Strait of Hormuz remains blocked. Rising fuel costs threaten to ripple through the economy, affecting transportation, grocery, and business expenses, potentially delaying any interest rate cuts by the Fed, especially as the central bank grapples with both high inflation and a surprise job loss of 92,000 in February. The economic uncertainty is also igniting political tensions, with affordability a hot-button issue leading into midterm elections.
- https://apnews.com/article/9015cbc7db4569fddd124659acfcaf86 – On Wednesday, U.S. stock markets experienced mixed trading as oil prices began to climb again amid ongoing geopolitical tensions. The S&P 500 dipped by 0.1%, the Dow Jones Industrial Average fell by 316 points (0.7%), while the Nasdaq rose 0.1%. The recent volatility is largely attributed to the war with Iran, which has disrupted oil production and raised fears of long-term supply issues. Brent crude jumped 5% to $92.18 per barrel, and U.S. crude rose 4.7% to $87.44. The International Energy Agency announced the release of 400 million barrels of emergency oil stocks to help calm markets. However, true market relief awaits the end of the conflict, especially regarding the critical Strait of Hormuz, where oil transport has halted. Tensions have escalated with the U.S. targeting Iranian vessels and Iran threatening to block all regional oil exports. Meanwhile, U.S. inflation remains elevated at 2.4% year-over-year and could spike further due to rising energy prices. Wall Street faced added pressure from weak corporate earnings and tepid job growth, fueling concerns about stagflation.
- https://apnews.com/article/357bea33f911695c9b9cbf1d4f5c443e – The ongoing American-Israeli war with Iran has reached a critical point, significantly impacting global energy and geopolitics. Iran has escalated tensions by attacking commercial ships and targeting the Dubai airport, effectively closing the vital Strait of Hormuz—a route for 20% of the world’s energy. This has caused a drastic surge in oil prices and prompted the International Energy Agency to release a record 400 million barrels from emergency reserves. The conflict has resulted in over 1,800 deaths across Iran, Lebanon, and Israel, with U.S. forces reporting casualties and damage. The situation has also caused massive displacement in Lebanon due to Israeli strikes on Hezbollah, while the U.N. and E.U. scramble to provide aid. Iran is facing international scrutiny, especially after reports suggest Iran’s new supreme leader was injured in early Israeli strikes. Allegations also emerged about the U.S. mistakenly bombing an Iranian school, killing over 165. President Trump remains vague on war outcomes and fallout, and allies are coordinating oil reserve releases. Global shipping in the Hormuz Strait remains under threat, with over a dozen maritime incidents reported. Humanitarian crises are worsening in Lebanon and Iran, and Iran’s potential withdrawal from the World Cup reflects deepening isolation. The conflict shows little sign of resolution.
- https://time.com/7383060/gas-prices-iran-war-oil/ – Gas prices in the U.S. have surged significantly amid escalating conflict involving Iran, with the national average rising 14% in one week to $3.41 per gallon. The price jump follows a U.S.-Israeli military strike on Iran that has severely disrupted global oil flows, particularly through the critical Strait of Hormuz, which normally handles about 20% of the world’s crude oil and natural gas shipments. Currently, no tankers are passing through the strait, intensifying global supply concerns. Iran has threatened U.S. and Israeli ships but claims the strait remains open to other vessels. Additionally, Iranian missile attacks on oil and gas infrastructure in nearby Gulf nations have further impacted production and prices. Crude oil prices are now above $90 per barrel, and natural gas prices in Europe are also spiking. Despite the impact on gas prices, President Trump remains unconcerned, stating in a recent interview that prices will stabilize once the conflict resolves. He emphasized his administration’s past success in lowering fuel costs, touting prices as low as $1.85 in some states. The White House has not issued an official comment.
- https://apnews.com/article/a88fbee22bf1ded91d51454033f1c088 – On March 5, 2026, U.S. stock markets dropped sharply as oil prices surged to their highest levels since the summer of 2024, primarily due to the ongoing war with Iran. The S&P 500 fell 0.6%, the Dow Jones Industrial Average lost 1.6% (dropping 784 points), and the Nasdaq declined by 0.3%. The spike in oil—with U.S. crude jumping 8.5% to $81.01 and Brent crude rising 4.9% to $85.41—stirred fears of prolonged economic strain, increased inflation, and sustained high interest rates. The average U.S. gasoline price jumped 9% in a week to $3.25 per gallon. Investor anxiety is centered around potential disruptions in the Strait of Hormuz, a crucial oil passageway. Airline stocks were among the hardest hit due to fuel cost increases and widespread flight disruptions in the Middle East. Conversely, Broadcom stock climbed 4.8% after robust AI-driven earnings. Treasury yields also rose, with the 10-year yield climbing to 4.13%, reflecting inflation concerns. Despite the turmoil, some analysts advise patience, and historical patterns suggest markets may rebound if oil prices stabilize. Meanwhile, global markets showed mixed results: Asian stocks rebounded, but European indexes declined amid the volatility.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
10
Notes:
The article was published on 11 March 2026, which is within the past seven days, ensuring high freshness. No evidence of recycled or republished content was found.
Quotes check
Score:
10
Notes:
The article does not contain any direct quotes, which eliminates concerns about quote verification.
Source reliability
Score:
3
Notes:
The article originates from Energy News, a niche publication with limited reach. This raises concerns about the independence and reliability of the source, as it may lack the editorial standards of major news organisations.
Plausibility check
Score:
8
Notes:
The claims about the impact of the Hormuz disruption on European energy markets are plausible and align with reports from other reputable sources. However, the article’s analysis is based on data from 28 February 2026, which may be outdated given the rapidly evolving situation.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents plausible claims about the impact of the Hormuz disruption on European energy markets. However, it relies on data from 28 February 2026, which may be outdated given the rapidly evolving situation. Additionally, the source is a niche publication with limited reach, raising concerns about the independence and reliability of the information. These factors contribute to a medium level of confidence in the article’s accuracy.