WIREDGOV

EXPERT COMMENT

Europe remains over reliant on insecure and persistently expensive natural gas. It should focus efforts on reducing demand.

European governments, most of which rely on oil and gas imports to fuel their economies, have been nervously watching prices climb and storage levels fall in the weeks since the US-Israeli attack on Iran triggered the closure of the Strait of Hormuz.

They could be forgiven for being relieved by this week’s news of a US-Iran framework agreement that promises to enable ships to transit the Strait, through which approximately one-fifth of oil and liquefied natural gas (LNG) flowed before the war.

This would be premature, however. Even in the event of a lasting deal, it will take months for shipping flows to fully resume. Logistically, it will take time to reschedule routes efficiently as ships struggle to transit the strait and supply chains are disrupted. Crucially, insurance and shipping firms must be convinced of safe passage in the long term, which remains uncertain. 

More importantly, the war has reconfigured the global LNG market, on which Europe increasingly depends, in ways that are unfavourable to its energy security. This reconfiguration will continue to weigh on Europe, irrespective of any deal.  

Click here to continue reading the full version of this Expert Comment on the Chatham House website.