Hormuz Crisis Sparks €41 Billion Fossil Fuel Bill for EU, Exposing Dire Energy Flaws

A recent report by the Centre for Research on Energy and Clean Air (CREA) highlights the substantial additional fossil-fuel import costs incurred by countries globally due to disruptions in the Middle East. Among the 170 nations examined, 134 experienced higher diesel prices than anticipated before the conflict. European economies were particularly hard hit, with the Netherlands, Italy, France, and Spain collectively absorbing almost €41 billion in extra fossil-fuel costs between March and August 2026, without importing any new volumes of energy. The Netherlands faced an estimated €11.5 billion in additional costs, Italy €12.7 billion, France €10.8 billion, and Spain €8.8 billion.

These figures underscore Europe's vulnerability to global oil and gas price fluctuations. The crisis has added over €282 billion to fossil-fuel import bills worldwide, with oil alone contributing €140 billion to this increase. Following the US and Israel's war against Iran on 28 February, liquefied natural gas (LNG) prices surged by 60% in the Atlantic and 75% in the Pacific, while diesel and petrol prices jumped by 59%. To compensate for the Middle East supply disruptions, the US and Norway emerged as the primary suppliers of petroleum oils and LNG to the EU in the first quarter of the year, according to EU data.

The diesel price shock is especially significant for Europe, given its heavy reliance on this fuel for freight, farming, and industry. Higher fuel costs inevitably propagate through supply chains, ultimately leading to increased prices for goods across the continent. However, CREA's analysis suggests that Europe's investment in clean energy infrastructure is proving to be a critical energy-security asset. The report indicates that clean power capacity installed in the bloc since 2020 saved importing countries €36 billion in fossil-fuel purchases during the initial five months of the crisis. Luke Wickenden, an energy analyst at CREA, emphasized that "The best way to protect against high oil prices is to get off the black stuff as quickly as possible," highlighting that oil and gas prices have historically been an "Achilles’ heel" for both household finances and the global economy.

The savings generated by clean electricity were particularly valuable because every unit of gas, oil, or coal displaced by renewable energy meant one less unit that had to be purchased at wartime prices. The report advocates that renewables and electrification are no longer solely about reducing emissions but also serve as a crucial hedge against geopolitical energy shocks. Countries with a larger proportion of clean power supply and lower fossil-fuel demand are inherently less exposed when international fuel prices spike. Isaac Levi, CREA's Europe-Russia policy & energy analysis team lead, noted that while "Renewables saved Spain billions," the country's oil-dependent transport, aviation, and industry sectors still left each person with an additional gross fossil fuel import cost of €181. This illustrates the need for faster electrification across the wider economy to complement clean electricity generation.

Concurrently, over 100 European and international organizations have penned a letter to European Commission President Ursula von der Leyen, urging her to present a clear strategic vision and a comprehensive fossil fuel exit plan during her State of the Union address on 16 September. The letter, spearheaded by Climate Action Network Europe, argues that Europe is paying a double price for its fossil-fuel dependence: first through elevated energy costs, and then through the escalating damage caused by climate change. It asserts that fossil fuel dependence has consistently undermined Europe's prosperity and constrained its global influence, exposing citizens to price shocks and external geopolitical decisions.

The signatories advocate for an independent report, similar to the Draghi report, to outline a strategy for the EU to accelerate a complete fossil-fuel phase-out while simultaneously safeguarding consumers, workers, and industries. This proposed strategy centers on renewables, efficiency, robust grids, and clean flexibility as its main drivers. It also calls for EU and national spending to be reallocated away from investments that perpetuate fossil-fuel dependence and emphasizes the need for a strong industrial policy to secure supply chains for Europe's burgeoning clean-energy industries.