![\"\"](\"https:\/\/static.euronews.com\/website\/images\/logos\/logo-euronews-stacked-outlined-72x72-grey-9.svg\"){kind=logo}
\n ADVERTISEMENT<\/p>\n
Despite the major fall in oil prices after the US and Iran confirmed a two-week-long ceasefire, Europe may not yet breathe a sigh of relief due to the long-lasting impact of energy supplies on which the bloc heavily relies.<\/p>\n
\n ADVERTISEMENT<\/p>\n
\n ADVERTISEMENT<\/p>\n
The Iran war and the de facto closure of the Strait of Hormuz have triggered the largest supply disruption in the history of the global oil market, according to the International Energy Agency (IEA). The strikes on Gulf facilities are expected to have a multi-year impact on gas supply.<\/p>\n
Europe is significantly affected, even though it sources only a small share of its oil and gas directly through the Strait of Hormuz, which has been effectively controlled and mostly blocked by the Iranian forces up until the ceasefire.<\/p>\n
Opening the strait was a non-negotiable part of the ceasefire, as the chokepoint is essential for the global oil and LNG shipments. In 2025, nearly 15 million barrels of crude oil per day passed through the strait, the IEA says. Of this, around 600,000 barrels a day, or just 4%, were routed to Europe, compared with the EU\u2019s daily needs of 13 million barrels.<\/p>\n
Even so, a rapid fall in petrol prices in Europe is unlikely, even if a peace deal were reached following the ceasefire.<\/p>\n
\u201cEven if that peace is here tomorrow, still we will not go back to normal in the foreseeable future,\u201d the EU\u2019s Energy Commissioner Dan J\u00f8rgensen said last week.<\/a><\/p>\n How global prices are affecting European imports<\/p>\n The EU imports 80\u201385% of its oil, according to Eurostat, from a wide range of suppliers. The US is the largest, accounting for 15.1% by value, followed by Norway and Kazakhstan.<\/p>\n Most global crude trade is priced against Brent crude, the main international benchmark.<\/p>\n Prices for next month\u2019s delivery rose from $72\u2013$73 per barrel before the war to nearly $120 at the peak, before the ceasefire was agreed upon. Even after the ceasefire, the price was around $93 on Wednesday.<\/p>\n European gas prices have also climbed since 28 February, when the war started. Futures rose to \u20ac50 per MWh from about \u20ac35.5 before the war, peaking at \u20ac61.93\/MWh on 19 March. The price settled around \u20ac44\/MWh on Wednesday, after the ceasefire.<\/p>\n How global prices reach European consumers<\/p>\n In many European countries, electricity prices are set by the most expensive source, often gas.<\/p>\n \u201cRising gas prices impact British and European energy bills via both the direct cost of gas and the increased cost to generate electricity through gas-fired power plants\u201d, said ICIS UK and European Gas Specialist Ethan Tillcock, who talked to Euronews Business before the ceasefire.<\/p>\n Fixed contracts and government support can delay or soften the impact. In Germany, wholesale gas prices linked to TTF influence electricity prices by around 40% and household gas prices by roughly 50\u201360%, with the rest made up of taxes, network charges and policy costs.<\/p>\n For oil, the French central bank estimates that a 1% increase in refined fuel prices leads to about a 0.75% rise in pre-tax fuel prices and around a 0.3% increase at the pump, depending on taxes.<\/p>\n A $10 rise in crude oil prices adds roughly 3\u20136 euro cents per litre for European consumers, depending on national tax systems. Exchange rates also matter: since oil is priced in US dollars, a weaker euro raises costs even if benchmark prices are unchanged.<\/p>\n To limit price increases, ministers from Italy, Germany, Spain, Portugal and Austria have asked the EU to consider a tax on excess energy profits.<\/p>\n What needs to happen for prices to fall<\/p>\n Europe has some tools to ease pressure, including strategic reserves\u2014part of the IEA\u2019s 400 million barrels<\/a>\u2014and national measures<\/a> such as tax cuts, subsidies and rationing.<\/p>\n However, \u201cthese can only temporarily soften the situation,\u201d said Andrei Covatariu, a nonresident senior fellow with the Atlantic Council’s Global Energy Center, who talked to Euronews Business before the ceasefire.<\/p>\n The IEA estimates Gulf countries have cut oil production by at least 10 mb\/d due to the disruption, about 10% of global demand.<\/p>\n But physical supply is only part of the story. Uncertainty also has a role to play.<\/p>\n There is \u201ca large risk premium driven by uncertainty, but we are also noticing a large real disruption in flows and production\u2014so you\u2019re not looking at a purely psychologically driven market,\u201d said Covatariu.<\/p>\n What is driving oil prices higher<\/p>\n