The Strait of Hormuz has been effectively shut since March, driving Brent above $104 a barrel and up 58% year over year. Yet the European Commission trimmed its 2026 growth forecast by only three tenths of a percentage point, a gap the bloc's own decades of energy-efficiency gains help explain.
A Small Growth Hit From a Large Oil Shock
The European Commission cut its 2026 growth forecast from 1.5% to 1.1% in May, with a rebound to 1.4% penciled in for next year, even as the Strait of Hormuz — which used to move roughly a fifth of the world's oil and LNG — has been effectively shut since March. Unemployment across the bloc holds around 6% through that window.
That forecast sits against a real oil shock. Saudi output dropped around 1.9 million barrels a day in August, tanker rates are breaking records, and the EIA doesn't expect Middle East production back near pre-conflict levels until Q2 2027. Brent trades a touch above $104 this morning, down slightly from yesterday's surge.
Two Decades of Efficiency Cushion the Blow
Even so, the EU now runs on roughly 44% less energy per euro of output than it did in 1995, and more than a third of that improvement has landed since 2019 alone. The bloc still imports 57% of the energy it consumes and spent €340 billion on fossil fuel imports last year, so the exposure hasn't disappeared — it has just shrunk.
Spain and Italy Diverge on the Same War
The gap shows up clearest inside the bloc. Gas set the price of electricity in about 15% of hours in Spain this year, against 89% in Italy. When Hormuz shut, Spain grew 0.7% in Q2 and outpaced Germany, France and Italy, while Italy was flagged as the eurozone's most exposed economy if prices stay elevated.
One Dependency for Another
The bloc has also cut a bigger exposure. Russian gas fell from 45% of EU imports in 2021 to about 12% by 2025, but the US has stepped into that gap. The US now supplies roughly two-thirds of Europe's LNG and 89% of Germany's, with the EU committed to buying $750 billion of American energy by 2028 under last July's trade deal.
One landlord replaced another.
Source: Oilprice.com
Trading involves risk.
Risk Disclaimer
