WIREDGOV

The disruption of the Strait of Hormuz has shaken oil and gas prices, and for Europe, can only stir a greater drive for energy independence.

In the wake of Russia halting gas exports to pressure Europe over its stance on Ukraine, the EU started REPowerEU plan to secure supplies through geographical diversification and clean energy installation. And as the imperative diminished, the energy security debate has largely focused on protecting critical infrastructure from hybrid threats and cyberattacks – casting supply security into the shadows. However, the recent military escalation involving the United States, Israel and Iran has brought attention back to a more traditional vulnerability: reliance on energy imports moving through geopolitical chokepoints.

Iran has de facto closed the Strait of Hormuz, through which flows around 20% of global oil and liquefied natural gas (LNG) shipments, making it one of the world’s most important energy routes. As a result, maritime insurers have begun refusing coverage for vessels in the region, forcing market participants to price geopolitical risk more directly into energy markets.

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