European Energy Risk Index (EERI)

However, the underlying risk environment is far from static, with several acute geopolitical flashpoints warranting close attention. The most pressing concern stems from Marisks’ warning over the “worst-case scenario” for oil tankers transiting the Strait of Hormuz amid escalating Iranian attacks. While direct supply lines to Europe are not immediately threatened, any sustained disruption in the Persian Gulf could reverberate through global oil markets, tightening supply and exerting upward pressure on European prices. At the same time, fresh warnings of Russian mobilization and renewed strikes on Ukraine’s energy grid highlight the persistent threat of cross-border contagion—particularly for Eastern European markets and gas transit corridors. The additional layer of uncertainty introduced by US-Canada tensions over wildfire smoke, while not directly impacting European energy flows, underscores the interconnectedness of environmental and geopolitical risks. Meanwhile, China’s pointed response to the UK’s British Steel nationalisation raises the specter of retaliatory measures that could impact critical supply chains for energy infrastructure projects, particularly as Europe accelerates its energy transition.

Looking ahead, market participants should remain vigilant for any escalation in the Strait of Hormuz, as even a temporary closure or heightened insurance costs for oil tankers could quickly filter through to European refiners and downstream markets.