Europe imports only about 4% of the crude and 7% of the liquefied natural gas (LNG) that pass through the Strait of Hormuz. By that measure, the strait’s near-closure since the war began on 28 February 2026 should barely register in European macro forecasts. However, the European Central Bank (2026) cut its 2026 growth projection by 0.3 percentage points and raised its inflation projection by 0.7 in its March 2026 baseline. The ECB’s first rate hike in three years, announced on 11 June 2026, confirms that the inflation channel is no longer hypothetical. At the same time, brent oil traded between US $78 and US $95 per barrel through the spring, and in maritime shipping, war-risk insurance climbed by up to 50% from 2% to roughly 3% of vessel value. By these measures, the (macro)economic hit for Europe is large relative to direct exposure – and Europe may be running the wrong crisis playbook.
The European exposure to Hormuz is best understood as a race. On one side, a bottleneck mechanism amplifies a small direct import share into a large macroeconomic shock: gas feeds into ammonia and from there into nitrogen fertiliser; oil feeds into naphtha and from there into petrochemicals; refining margins on middle distillates do not absorb shocks symmetrically; jet fuel has no short-run substitute at the airport gate.
On the other side, substitution at every level diffuses the shock: Atlantic Basin LNG replaces Qatari cargoes, refineries reconfigure, demand falls, REPowerEU governance coordinates. Hence Europe’s actual macro hit is the outcome of a tug-of-war between the bottleneck amplifier and the substitution attenuator, and the outcome is heterogeneous across sectors and across time horizons. In recent work, Hinz et al. (2026) gauge this race in a quantitative trade model in the spirit of Caliendo and Parro (2015). The short-run effects are estimated at between three and four times larger than the long-run effects – because the short run is precisely where substitution loses.
Where does the bottleneck win? The most instructive channel runs through chemistry. Qatar and Iran are among the world’s largest exporters of urea, the dominant nitrogen fertiliser. Their Gulf gas feeds the Haber-Bosch process and if that gas is removed from world markets, ammonia becomes scarce, global urea prices rise, and Europe’s farms pay more for the inputs that sustain crop yields. The mechanism does not stop at the farm gate. Higher fertiliser costs flow into food prices – our simulations point to a global food price increase of around 2.7% under the current de facto full closure of the strait (with a 90% confidence interval between 2.0% and 4.9%). The aggregate EU welfare cost we gauge is 0.40% – modest in headline terms, but heavily skewed towards food and energy expenditures that fall hardest on lower-income households.
Naphtha tells a similar story: Iran is one of the world’s largest methanol producers, and Qatar’s Ras Laffan is the world’s largest integrated petrochemical site. Removing this source of supply raises the cost of every downstream chemical from polyethylene to formaldehyde. Aviation is a third bottleneck: around 40% of EU jet fuel consumption is imported, and roughly half of those imports pass through the Strait of Hormuz. There is no quick substitute for jet kerosene at scale. Refining margins on middle distillates – diesel and jet – reached all-time highs in March and April. In each of these channels, the substitution mechanism is rather slow, capital-intensive or simply absent (e.g. in the case of fertiliser).
The substitution side, by contrast, looks strong – but only for the inputs where Europe has already done the work. In the case of natural gas, the United States supplied 56% of EU LNG in 2025, and Norway supplied 52% of EU pipeline gas (Eurostat, 2026). In the case of crude, the United States became the world’s largest oil exporter in May 2026, at 10.5 million barrels per day, and the International Energy Agency’s coordinated 400 million barrel stock release in March was the largest in its history (IEA, 2026). EU gas storage stood at 43% on 10 June – below the seasonal target, but not at crisis levels. These are real buffers. However, none of them substitute for fertiliser, jet fuel or naphtha. The substitution attenuator works in the channels where Europe built it after 2022. The bottleneck amplifier dominates in the channels where it did not.
The Strait of Hormuz is not the last chokepoint shock. The Red Sea, Suez, Malacca and Panama are each one geopolitical accident away from the same test, and the same race. The 2022 playbook after an effective decoupling from Russian energy sources served Europe well against a single supplier cutoff: REPowerEU diversified Russian gas dependence, storage rules tightened, the Energy Platform aggregated demand. However, that playbook addresses energy import dependence, not critical-input vulnerability.
The bottleneck list is actually not long for the current crisis – nitrogen fertiliser, middle distillates, naphtha-based chemistry, jet kerosene and a handful of specialty inputs from rare gases for chip lithography to aluminium alloys for power grids – but it carries Europe’s food prices, its chemical industry and its airlines. And the next crisis will bring its own list of products.
What Europe needs is not another energy-crisis playbook but a critical-inputs playbook – serious monitoring and “stress testing”, potentially strategic reserves for the few inputs that matter most, and a focused trade and industrial policy that treats chokepoint exposure as a primary parameter rather than a footnote while not being too broad to be irrelevant. Whether the next chokepoint closes in 2027 or in 2034 is unknowable. What the consequences of each could be and how best to react are not.
References
Caliendo, L., & Parro, F. (2015). Estimates of the Trade and Welfare Effects of NAFTA. Review of Economic Studies, 82(1), 1–44.
European Central Bank. (2026, March). Macroeconomic Projections for the Euro Area. European Central Bank.
Eurostat. (2026). EU Imports of Energy Products — Latest Developments.
Hinz, J., Mahlkow, H., Sogalla, R., & Willmann, G. (2026). The Cost of Closing the Strait of Hormuz: Energy Bottlenecks and Global Food Security. Kiel Policy Brief, 206. Kiel Institute for the World Economy.
International Energy Agency. (2026). The Strait of Hormuz. Factsheet, February; Oil Market Report, April.