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Direct trade between the European Union and Iran is extremely small, with data from Eurostat showing imports from Iran account for roughly 0.03% of the EU’s total imports, largely due to the bloc’s sanctions on the country.
However, disruptions in the Gulf region following the US and Israel’s war with Iran still leave Europe’s economies exposed, partly due to the Strait of Hormuz — which lies between the south of Iran and the north of Oman — and partly due to the continent’s dependence on global markets for oil and gas.
In 2023, around 20 million barrels of oil passed through the Strait of Hormuz daily — equivalent to one-fifth of global petroleum liquids consumption, according to the US Energy Information Administration. Around one-fifth of the world’s liquefied natural gas (LNG) also transits the strait.
Some European energy imports rely on the shipping route. Research by the ifo Institute estimates that about 6.2% of the EU’s crude oil imports and 8.7% of its liquefied natural gas imports transit the strait.
European countries are also impacted due to their reliance on global markets for oil and gas, with disruptions to shipping sending prices ballooning and prompting G7 countries to agree on the release of 400 million barrels of strategic oil reserves — the largest emergency distribution on record.
Simone Tagliapietra, senior fellow at the Brussels think tank Bruegel, said higher energy prices could push up inflation and slow economic growth in Europe.
“If oil and gas prices keep spiking, the main economic consequence for Europe would be a rise in inflation and a hit to economic growth,” he said.
Tagliapietra added that because the European Union imports most of its fossil fuels, such a shock would effectively act like a tax on households and firms, reducing purchasing power and increasing production costs, particularly for energy-intensive industries.
On the ground, higher oil prices would translate into more expensive petrol and diesel, higher transport costs and household energy bills, whilst rising gas prices could push up electricity and heating costs for Europeans.
The EU imports some oil from the Middle East, with data showing that, in 2024, Saudi Arabia supplied around 7% of Europe’s oil demand, and Iraq about 5.7%.
Overall, the US accounted for about 16% of the EU’s petroleum oil imports, followed by Norway with 13.5% and Kazakhstan with 11.5%.
Germany, Spain and Italy exposed
Within Europe, crude oil imports are concentrated in a handful of countries. In 2023, Germany imported around 77 million tonnes of crude oil, followed by Spain with about 62 million tonnes, and Italy with roughly 61 million tonnes, according to Eurostat.
The Netherlands and France follow with 54 million tonnes and 46 million tonnes respectively. Together, these five countries account for roughly two-thirds of the EU’s crude oil imports, even if their oil is not imported from the Gulf directly.
The consensus between G7 countries following an emergency meeting on Wednesday was that the current situation did not justify turning to Russian oil as a source of additional supply.
Germany’s Chancellor Friedrich Merz said the country would not ease sanctions on Russia despite the potential economic pressure, citing solidarity with Ukraine.
He said Germany would “prepare to endure such a phase if necessary,” adding that the situation would stabilise quickly should the US-Israeli war with Iran end.
Spain’s economy, trade and business minister, Carlos Cuerpo, told Spanish TV that, currently, prices were being contained but that the situation was still “volatile”.
France, meanwhile, said it would carry out inspections at petrol stations to ensure companies were not exploiting the situation by excessively raising prices.
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