Electrification in European energy prices
Summary
- Geopolitical tensions in the Persian Gulf have disrupted tanker traffic, leading to increased oil and gas prices, impacting euro area inflation and electricity price futures.
- Gas storage filling in Europe is delayed, particularly in Germany and the Netherlands, raising risks of sudden price increases as autumn progresses.
- Mitigating factors include Italy's high gas reserves, underestimated energy flows through Hormuz, and limited pass-through of gas prices to euro area energy inflation.
- The situation remains volatile, affecting ECB decision-making, with a separate meeting preview to be released soon.
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Automatic translation: Originally published in Finnish 08/09/2026, 04:53 GMT. Give feedback here.
Geopolitical tensions in the Persian Gulf have tightened even further as the United States and Iran have ended up escalating the conflict in the region instead of sitting down at the negotiating table. As a result, "official" tanker traffic through the Strait of Hormuz has practically ground to a halt, while the Houthis have simultaneously restricted traffic in the southern Red Sea through attacks. Oil and gas prices have risen, which was reflected not only in the euro area's August flash inflation figure, but also in higher electricity price futures.
Euro area: Components of inflation
Source: LSEG
The risks for the winter have increased. The filling of gas storage facilities has been delayed during the spring and summer across Europe, and particularly Germany and the Netherlands are lagging behind the 2021 level. This exposes major economies to sudden price spikes as autumn progresses, according to an article by TS Lombard.
Source: TS Lombard
However, three factors mitigate the situation. Firstly, Italy, which is the most gas-dependent of the major euro area economies, has already filled its storage facilities to over 80%. Secondly, "official" statistics on energy flows through Hormuz significantly underestimate actual supply: according to Kpler data cited by TS Lombard, the majority of freight vessels passing through the region have moved "in the dark", and total shipments have already risen to around two-thirds of pre-war levels. Thirdly, the pass-through of natural gas prices to euro area energy inflation is limited, at around 40%. Despite the rise, the oil price has also remained below 100 USD per barrel, which is clearly below the ECB's baseline scenario from June (see figure below). The overall picture is therefore twofold: the threat of a winter energy crisis grows alongside the price of gas, but there are also mitigating circumstances.
Source: TS Lombard
Oil price, USD/bbl
Source: LSEG
The situation remains extremely volatile and dependent on geopolitical developments, complicating the ECB's decision-making on Thursday. A separate meeting preview will also be published in the coming days.
