Europe’s Energy Crisis: From Russian Gas to Strait of Hormuz Risks | REPowerEU & Grid Overhaul

The European Union’s long-running struggle with energy dependence is entering a new phase, one where shifting geopolitical pressures are reshaping vulnerabilities. Even as progress has been made in weaning the bloc off Russian fossil fuels, a new reliance on Liquefied Natural Gas (LNG) – and its transit routes – is emerging as a critical concern. Recent tensions in the Gulf, particularly around the Strait of Hormuz, are highlighting this risk, prompting renewed debate over energy security and the potential for a more integrated European energy market.

The energy crisis of 2022 underscored the EU’s precarious position, heavily reliant on imported fossil fuels. In response, the EU pivoted towards LNG, with 10-15% of those supplies now flowing through the Strait of Hormuz, a narrow waterway of immense strategic importance. According to Euronews, disruptions to traffic in the strait are already impacting energy prices across Europe, driving up costs for industries and households.

From Russian Pipelines to LNG Chokepoints

The EU has demonstrably reduced its reliance on Russian gas. In 2021, Russian gas accounted for 45% of EU imports, falling to 13% in 2025. Fossil fuel imports decreased from 45% in 2021 to 27% for oil and 50% for coal. This shift was facilitated by increased LNG imports, rising from 20% in 2021 to 45% in 2025. The US, Australia, and Norway have become key alternative suppliers, providing 60% of LNG, 70% of coal, and 42% of oil respectively as of the third quarter of 2025. However, this diversification hasn’t eliminated risk. it’s merely shifted it. The EU spent €396 billion on fossil fuel imports in 2025, a stark reminder of the deep-seated dependence that won’t be easily broken.

Despite increased storage capacity – reaching at least 90% annually since 2022 under the REPowerEU initiative – and a rise in renewable energy sources to 25.2% of total energy consumption in 2025, Europe remains exposed. Domestic gas production only covers 10% of the EU’s needs. The emergence of the Strait of Hormuz as a potential bottleneck is particularly concerning, with Iran’s new supreme leader, Mojtaba Khamenei, threatening to maintain a blockade of the waterway.

The “Grids” Package: Rewiring Europe for Resilience

The EU’s response to this evolving energy landscape is centered around the “Grids” package, a sweeping set of reforms aimed at creating a unified European energy market. Launched in December 2025, this €1.2 trillion initiative seeks to accelerate the development of cross-border energy infrastructure and reduce reliance on imported fuels. The package revises rules related to planning, permitting, investment, and cross-border coordination, modifying four key EU directives, including those concerning renewable energy and electricity market design.

A core element of the “Grids” package is streamlining the permitting process for energy projects. Solar and storage projects under 100 kilowatts will require only a grid connection permit, while larger projects will have a two-year approval deadline, with automatic approval if authorities exceed that timeframe. Large-scale, cross-border projects deemed to be of common interest will face a strict 42-month limit for all permitting procedures. The initiative also aims to boost domestic production of critical components like transformers and cables, targeting 40% EU production by 2030 and implementing new supplier controls.

However, the package isn’t without its challenges. Industry groups like Eurelectric support the reforms but oppose mandatory profit-sharing for projects exceeding 10 megawatts. Environmental NGOs, meanwhile, express concern that granting “overriding public interest” status to certain projects could undermine biodiversity assessments and lead to legal challenges. Member states remain divided, with Germany and Denmark advocating for EU-level coordination while Poland and Romania seek more flexible timelines due to administrative weaknesses.

Uneven Exposure Across the Union

The impact of energy dependence varies significantly across EU member states. Malta (98% import dependence), Cyprus (88%), and Luxembourg (91%) are particularly vulnerable. France, with its substantial nuclear capacity, is less exposed, relying on imports for only 52% of its energy needs. This disparity highlights the need for a coordinated, EU-wide approach to energy security.

The shift from Russian gas to LNG, while reducing immediate dependence on a single supplier, has created a new geopolitical risk. The EU is projected to source 40% of its gas imports from the US by 2030, raising concerns about reliance on another external provider. As reported by Le Temps, discussions are underway regarding potential responses, including leveraging the EU’s Aspides naval mission (currently deployed in the Red Sea) or exploring a framework similar to the Black Sea Grain Initiative.

Beyond Infrastructure: Market Dynamics and Geopolitical Tensions

The current geopolitical climate is exacerbating the situation. Following recent attacks in the Gulf, natural gas futures have surged 60%, and oil prices have surpassed $100 per barrel. EU gas storage levels are lower than last year (30% filled compared to 39% at the same time in 2025). Goldman Sachs warns that a month-long closure of the Strait of Hormuz could push gas prices to €73 per MWh. The European Commission has convened emergency coordination groups, and finance ministers have discussed tapping strategic reserves. The International Energy Agency (IEA) has authorized the release of 400 million barrels of oil from reserves, supported by 32 countries, including Germany and Austria.

However, the pace of fundamental reforms remains a point of contention. Commission President Ursula von der Leyen has floated the idea of price caps or subsidies, but has ruled out a return to Russian energy. Commissioner for Economy Valdis Dombrovskis cautioned against a “stagflation shock” if the conflict persists, while Energy Commissioner Dan Jørgensen defended the importance of renewables and infrastructure investment as the sustainable solution. Germany has indicated a willingness to consider reserve releases, but has not yet taken action.

What’s Next: A Balancing Act

The EU faces a delicate balancing act. While the “Grids” package and increased LNG diversification represent steps in the right direction, the immediate threat posed by potential disruptions to the Strait of Hormuz requires a more immediate response. The full implementation of the “Grids” package isn’t expected until 2028, leaving the EU vulnerable in the interim. The debate over price controls and strategic reserve releases will likely continue, as will efforts to secure alternative supply routes and bolster energy storage capacity. The crisis underscores the need to accelerate the transition to renewable energy sources, not as an environmental imperative, but as a matter of economic and strategic necessity. As Damian Boeselager of Volt Europe stated, “We still consider the transition as something very costly, but we see today that not making the transition is actually even more expensive.”

Le Parisien reports that US President Donald Trump is pressuring NATO allies to secure the Strait of Hormuz, threatening consequences for the future of the alliance if they fail to do so, adding another layer of complexity to the situation.