As the Israel-Iran conflict escalates further, there is a mounting fear that natural gas fields are going to be targeted — as well as oil shipping routes. Europe’s liquefied natural gas supply would be seriously impacted, along with its economies.
Europe currently has a number of natural gas suppliers. Norway was the top supplier of gas to the EU in 2024, providing over 33% of all gas imports. Other suppliers included the United States, Algeria, Qatar, the UK, Azerbaijan and Russia.
The largest LNG importing countries in the EU include France, Spain, Italy, the Netherlands and Belgium.
If shipments from Qatar are impacted, Belgium, Italy and Poland are the most impacted, as the country supplies 38-45% of their LNG imports, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
The good news is that demand for gas is usually at its lowest level in Europe at this time of the year. Even so, the hotter-than-usual weather across the bloc is boosting demand for cooling, which could increase the need for energy in the coming weeks.
“Spikes in energy prices push up inflation, and can have a knock-on effect on the central bank’s policy,” Alshammari said.
Central banks, including the US Fed and the Bank of England, have stopped short on cutting interest rates as the uncertainty is rising. If they see that inflation is more persistent in the near term, and that — in the case of the ECB and the BoE — the 2% target is floating away, further monetary tightening could squeeze the economy with higher costs for borrowing and investment.
“As a result of the Ukraine War, there was a pivot from the EU in particular to get their liquefied natural gas, their LNG gas, not from Russia but from producers including Qatar,” Marco Forgione, Director General of the Chartered Institute of Export and International Trade, told Euronews.
He added that anything constraining the transit of liquefied natural gas will have a quick impact on the EU, “particularly in the manufacturing sector”.
Oil demand is the highest in summer, partially due to industrial activity. But current supply constraints and higher prices could further squeeze manufacturing.
For European businesses, who are already facing heightened trade tensions linked to US tariffs, facing the current complications is “like playing four-dimensional chess”, Forgione said. He also spoke to Euronews before US strikes over the weekend.
Forgione predicted that sudden spikes in oil prices and depressed shipping rates may result in significant consumer price increases, supply shortages, and shrinkflation. This is where a product shrinks in size but the price remains the same.
Global market implications
Iran’s energy infrastructure is in the crosshairs of the conflict.
The country is the ninth-largest oil producer globally. At full capacity, the country produces 3.8 million barrels of oil a day, according to the US Energy Information Administration. But due to Western sanctions, Iran’s oil exports are mainly shipped to China and India.
Iran exports 1.5 million barrels per day, providing 10% of China’s oil imports. If the world’s second-largest economy, China, is deprived of this import, it could impact its economy as it is forced to source this from elsewhere, meaning prices could skyrocket.
The potential geopolitical consequences of the Iran-Israel conflict are leaving markets on edge, and it seems volatility is here to stay.
Meanwhile, Europe’s role in the conflict remains to be seen.
“My biggest worry is that it turns out to be a wider conflict, involving European countries, UK and France. This is the scenario that nobody wants to see happen,” added Alshammari.





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