Whatever the outcome of the US-Israeli conflict with Iran, the impact on security, energy and fertiliser supply globally is already severe.
The Strait of Hormuz— connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea— is the export route for a whopping 20 percent of global petroleum liquids consumption, comprising 15 percent of crude oil and five percent of refined oil products, plus fertilisers.
Its closure, barring a few tankers selected by Iran, represents another shock for globalisation following the COVID pandemic of a few years ago.
This conflict in the Middle East has exposed the vulnerability of many countries reliant on the Strait of Hormuz as one of the world’s foremost energy chokepoints.
Now, energy prices are rising and inflation will follow, as both the European Commission and European Central Bank have warned. The situation is costly and politically charged.
First, the good news: in 2024, renewable energy sources in Europe accounted for 47.5 percent of gross electricity consumption, including wind (38%), hydro power (26.4%) and solar power (23.4%).
This figure must be considered in the context of Europe’s wider energy mix, of which crude oil and petroleum products account for 38 percent, followed by gas (21%), renewable energy (20%), nuclear energy (12%) and solid fuels (10%).
So, while the European Union (EU) itself satisfied 43 percent of its own energy needs in 2024, 57 percent was imported.
Oil and petroleum products accounted for 67 percent of EU energy imports, with the largest share coming from the US.
Whatever the longer-term outcome of the conflict in the Middle East, energy prices—already rising at the pumps and soon for households—are unlikely to fall in the months ahead.
Now, we must turn our attention towards gas prices in the US, the largest supplier of Liquefied Natural Gas (LNG) to the EU.
This matters because of the radical cuts to Russian gas imports introduced by the European Union following the Ukraine invasion of 2022.
The US stepped in to fill the gap and now accounts for 58 percent of the bloc’s total LNG import—at a hefty price that will only rise as a result of the conflict in the Middle East.
There are three consequences for Europe here. First, higher energy costs. Second, the need to diversify away from gas and other fossil fuels. And third, the need to increase the availability of renewables.
Diversification is expensive. Shifting quickly to renewable energy would entail connecting different parts of Europe’s grid system so that peaks in demand and gaps in generation can be balanced across borders.
This would mean getting all 27 Member States on board to agree on the grid and costs—and real energy integration across the EU.
The European Commission reckons the necessary investment in grid infrastructure would cost €1.4 trillion (yes, trillion) by 2040, but this is the price for energy reducing dependency on the US and Middle East and prioritising the climate.
Making Europe a leader in renewable, healthy and safe energy is about increasing its security and its economy. So, while industry and consumers alike might shudder at the costs involved, it is now imperative that leaders commit to communicating what is at stake.
*Disclaimer: The views expressed in this column, published in the April/May 2026 issue of Accountancy Ireland, are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.
JUDY DEMPSEY IS A NON-RESIDENT SENIOR FELLOW AT CARNEGIE EUROPE