The guns have quieted for now. But the energy shock may only be the beginning. For several weeks, the war in the Gulf raised fears of a major disruption to global energy flows. A two-week ceasefire between the United States, Israel and Iran has eased the immediate military pressure. Yet the economic uncertainty remains.
Europe’s last pre-crisis shipments of Middle Eastern energy are expected to arrive around Friday (10 April). After that, markets will increasingly reflect a new and less predictable reality shaped by the ceasefire and by the uncertain future of shipping through the Strait of Hormuz. For Europe, heavily dependent on imported energy, the diplomatic pause may offer only limited short-term relief.
A fragile ceasefire
A two-week ceasefire has halted roughly 40 days of American-Israeli strikes on Iran. Negotiations are scheduled to begin on 10 April in Islamabad under mediation from Pakistan.
The agreement, however, leaves many questions unresolved. Israel continues operations against Hezbollah in Lebanon, including major strikes on Beirut. Washington has said Lebanon was never part of the ceasefire. That places Tehran in a difficult position: tolerating Israeli strikes could carry domestic costs, while retaliation might collapse the diplomatic pause.
For now, Iran appears to be leaning on economic pressure rather than military escalation. The Islamic Revolutionary Guard Corps (IRGC) says shipping through Hormuz slowed sharply after what it described as Israeli violations. Iranian officials have framed the strait’s management as “smart,” which some analysts interpret as implying selective access, tolling, or administrative delays.
Such ambiguity keeps Tehran’s most powerful lever intact. Nearly a fifth of the world’s oil passes through the strait.
Global ripples
The energy consequences extend beyond oil and gas. Roughly 40% of the global helium supply comes from Qatar. Any disruption to Gulf shipping could ripple through supply chains for semiconductors and medical equipment, including MRI machines. Prices for plastics and other petrochemical products have already risen sharply.
Markets have remained relatively calm so far. That calm may reflect the temporary nature of the ceasefire as much as confidence in it. Energy flows depend less on formal blockades than on perceived risk. If insurers raise premiums or shipping companies begin rerouting vessels, supply could tighten quickly.
The geopolitical balance is delicate as well. China is Iran’s largest energy customer, but it also depends heavily on stable Gulf trade routes. Beijing’s priority appears to be predictability rather than confrontation. The short negotiating window may therefore suit Chinese interests, giving Beijing space to encourage stability without openly aligning with Western positions.
Europe’s energy dilemma
For the European Union and national governments, the challenge is familiar but increasingly acute: Europe imports most of its energy, and high prices quickly translate into pressure on households, industry and public finances.
Several policy responses are under discussion. The EU continues to adjust its EU Emissions Trading System and implement the Carbon Border Adjustment Mechanism, while delaying the phase-out of remaining Russian energy imports. Governments are also expanding national subsidies and demand-side measures intended to cushion consumers and businesses.
Diversification, however, remains constrained. Coordination with China – a major trading partner also exposed to energy disruptions – has so far been limited. The European Commission has even postponed a planned discussion on EU-China relations amid the crisis.
At the same time, the conflict is reopening older debates. Bart De Wever, Belgium’s prime minister, recently suggested Europe should consider normalising relations with Russia in light of mounting global tensions, though such proposals remain controversial.
Meanwhile, Ukraine continues targeting Russian export infrastructure at sea. These attacks may push global prices higher—strategically useful for Kyiv, but costly for energy-importing economies. Despite the pressure, Russian oil revenues reportedly reached roughly $9 billion last month.
Europe, therefore, finds itself navigating between geopolitics and energy dependence. The ceasefire may pause the fighting for now. Whether it also stabilises the energy system remains far less certain.
