The ongoing U.S. and Israel-Iran war will primarily impact Europe through energy market volatility, with outcomes ranging from a manageable price shock and modest growth slowdown to a severe energy-driven economic downturn, depending on the duration of the disruptions in the Strait of Hormuz. Since Feb. 28, the conflict involving Iran, the United States and Israel has evolved into an active regional war. The U.S. and Israeli airstrikes targeting Iranian military and strategic infrastructure and senior leadership have prompted Tehran to launch retaliatory strikes against Israel, U.S. assets in the region and Gulf states, as well as attacks on shipping across the Persian Gulf region. The Strait of Hormuz (through which approximately one-fifth of global oil consumption and liquefied natural gas trade transits) has emerged as the central pressure point, with Iran warning vessels against entering the corridor and maritime operators such as Maersk suspending routes. Oil markets reacted immediately: Brent crude temporarily crossed the $80 per barrel line, up from around $72 at close on Feb. 26, while European gas prices surged by as much as 49%. Equity markets across Europe declined by around 2% on Monday, with sectors such as aviation and transport particularly affected. However, energy and defense stocks posted gains of 6-7%. 

• On March 1, Citigroup set a short-term baseline for Brent for this week of between $80 and $90 per barrel, assuming the conflict remains at its current intensity without further infrastructure damage. On March 2, JPMorgan Chase warned that if the disruption in the Strait of Hormuz were to last more than three weeks, Gulf producers would exhaust their storage capacity and be forced to stop production. Under this scenario, they predict Brent will trade in the $100-$120 range. 
• The European Union relies on Norway, the United States and Kazakhstan for around 40% of its crude imports. These sources are lower-risk because they do not transit the Strait of Hormuz. Though the European Union imports only about 13% of its 9.1 million barrels a day from the Persian Gulf countries of Saudi Arabia and Iraq, because oil is a global market, disruptions to supply in the Strait of Hormuz affect its price. 
• As winter is entering its final weeks in Europe, natural gas storage levels are relatively low at around 30% and should soon begin being replenished. The Strait of Hormuz carries 20% of global LNG, including almost all exports from Qatar, which provides 15% of Europe's LNG. With the strait virtually closed and Qatar announcing the halting of LNG production on March 2, Europe is losing one of its suppliers just as it needs to begin the massive refilling process. Compounding this, the European Union is scheduled to start implementing its ban on Russian gas by both pipeline and LNG by the end of March. This may force the European Union to enter a global bidding war against Asian markets for limited U.S. cargoes, a situation that is likely to drive prices up and, in a severe scenario, result in government-mandated industrial rationing. 

In the coming weeks, European governments are likely to play a secondary role in the Iran crisis, calling for a diplomatic solution and offering mild support to the United States. European governments have responded to the ongoing conflict with coordinated, cautious diplomacy. The European Union issued a statement calling for "maximum restraint" and adherence to international law, acknowledging risks to global energy supplies and trade routes. At the same time, divisions are evident: the leaders of France, Germany and the United Kingdom urged Iran to negotiate while condemning retaliatory actions, whereas Spain publicly criticized the initial U.S.-Israeli strikes and Italy kept a low profile. The crisis is once again exposing structural divisions within Europe and reinforcing its role as a secondary actor in the Middle East. The immediate reaction (calls for de-escalation combined with reaffirmations of alliance commitments) reflects a familiar pattern seen during previous Middle East crises and the divergence in tone between member states suggests that coordination may weaken as the crisis evolves. Northern and Eastern European countries are likely to align more closely with Washington's strategic objectives, particularly given ongoing concerns about deterrence and NATO cohesion, whereas Southern European states may prioritize diplomatic engagement and regional stability, partly due to their exposure to migration flows from the Middle East. 

• France and the United Kingdom are already involved in the Iran crisis through their military presence in the Gulf, intelligence support and political alignment with the United States, but are not currently engaged in active combat. In the coming weeks, the most likely scenario is that both countries maintain a defensive and supportive role, including protecting shipping routes and reinforcing regional deployments while avoiding direct strikes on Iran. However, their involvement could escalate if key triggers occur, such as significant attacks on their forces. On March 1, France sent the Charles de Gaulle aircraft carrier to the Eastern Mediterranean in response to an Iranian drone strike on a French naval hangar in Abu Dhabi. For its part, the United Kingdom allowed the United States "defensive" strikes from British bases to intercept incoming missiles. Finally, the European Union announced the strengthening of Operation Aspides, which protects merchant vessels in the Red Sea and Persian Gulf.
• On March 1, the conflict officially reached European territory with an Iranian drone strike on the United Kingdom's Sovereign Base Areas in Cyprus. Other NATO assets, such as Greece's Souda Bay (which is within the 2,000-kilometer strike radius of Iranian Sejjil and Khorramshahr missiles) are at risk and could cause a more decisive response by NATO members if attacked. 
• U.S. President Donald Trump has warned that the attacks against Iran could last four weeks. A prolonged war, or a scenario in which the Iranian regime faces severe domestic unrest, could trigger a significant displacement of Iranian refugees, many of whom could seek to reach the European Union through Turkey and the Western Balkans. This influx, combined with the potential for "weaponized migration" by regional actors seeking leverage against Brussels, could paralyze EU decision-making and fuel right-wing populist movements, further weakening political consensus.

In a contained escalation scenario, Europe would face a manageable economic shock characterized by short-term energy price spikes, a modest growth slowdown and uneven sectoral impacts rather than systemic disruption. In the coming weeks, the economic repercussions of the Iran crisis in Europe will depend on the severity and duration of the conflict. If the conflict simmers down and does not result in a sustained closure of the Strait of Hormuz, oil prices would likely stabilize in the $80 per barrel range or lower, with temporary spikes driven by risk premiums rather than physical shortages. European gas prices, which have already risen sharply, would gradually normalize as supply chains adjust and alternative routes compensate for limited disruptions. Strategic reserves could be deployed to smooth short-term volatility, further reducing the risk of acute shortages. Economic growth in the eurozone would slow modestly due to higher input costs and reduced consumer spending but remain positive. Inflation would tick upward but remain manageable, potentially delaying monetary easing by the European Central Bank by one or two quarters. For businesses, the impact would be uneven: energy producers, defense contractors and commodity traders would benefit from higher prices and increased demand, while airlines, logistics firms and energy-intensive industries such as chemicals and manufacturing would face margin compression. 

In a scenario involving a sustained disruption to the Strait of Hormuz, Europe would face a renewed energy crisis with significant inflationary pressure, economic stagnation and higher business and market disruption. In a scenario of sustained disruption to shipping in the Strait of Hormuz, whether through direct blockade, sustained attacks on shipping or prohibitive insurance costs, oil prices could rapidly exceed $100-120 per barrel. War-risk insurance premiums would significantly increase shipping costs, while rerouting tankers around South Africa's Cape of Good Hope would add weeks of transit time and further strain global supply chains. While unlikely to replicate the scale of Europe's 2022 gas price shock, a sustained closure of the strait and high oil prices would raise headline inflation and weigh on industrial output, especially because European electricity prices are tied to natural gas prices. Inflation could rise by 1-2 percentage points, forcing the European Central Bank and Bank of England to maintain or even tighten monetary policy, while GDP growth could fall toward zero or negative territory in major economies such as Germany and Italy. Industrial output would be particularly vulnerable, with energy-intensive sectors (such as petrochemicals, steel and aluminum, road freight, aviation, shipping and agriculture) facing production cuts or, in an extreme case, temporary shutdowns. Consumer demand would weaken as fuel and electricity costs rise and governments might be forced to reintroduce subsidies or price controls, straining public finances. Against this backdrop, financial markets would also likely experience increased volatility.