Germany and Europe Absorb the Hormuz Supply Loss, but the Alternatives Are Thin
EIA data show Hormuz oil flows fell 77% from Q4 2025 to Q2 2026, yet European gas has rerouted faster than the continent's industrial power bill implies.
ICE Brent crude front-month fell 1.09% to $100.84 a barrel on Monday (2026-09-21), while ICE Endex TTF front-month was unchanged at €79.54 a megawatt-hour. Crude is still adjusting to Hormuz uncertainty; European gas markets appear already priced for a world that has rerouted. The divergence on the same supply shock reflects how much adjustment Europe's gas system has already done, and how little the alternatives have added to it.2
The EIA estimates oil flows through the Strait of Hormuz fell to about 4.9 million barrels a day in Q2 2026, from 21.6 million two quarters earlier, with LNG shipments from the strait all but ceasing. In 2024, roughly a fifth of global petroleum-liquids consumption and a fifth of the world's traded LNG crossed those 21 miles, most of it from Qatar. The closure redirected Atlantic Basin LNG flows within weeks, not quarters.2
Germany's adjustment has been more efficient than its critics expected. The share of LNG in Germany's total gas supply rose to 12% in the first half of 2026, from 10% a year earlier, despite the loss of Qatari supply through Hormuz, oilprice.com reported. Global LNG liquefaction volumes had slightly exceeded the prior year's level by May 2026, as new Atlantic Basin capacity offset some of the Qatari shortfall. Germany pulled harder on that Atlantic supply and kept the gap manageable.1
But Europe is not comfortable. The EU is racing to refill gas storage ahead of winter, with flexible LNG cargoes pulled toward Asia by JKM prices of $27.51 per MMBtu on Monday (2026-09-21). That pull has kept TTF elevated through the injection season, sustaining cost pressure on European gas buyers just as storage reinjection needs to accelerate.3
The cost consequences for industry are concentrated and now well-documented. Goldman Sachs ran the numbers plant by plant and found a large European car factory can carry €500 million a year in excess power costs against a US competitor. A chemical plant faces a gap closer to €1 billion. Those figures predate the full Hormuz pass-through to TTF. With European gas sustained above €79 a megawatt-hour, the arithmetic for energy-intensive manufacturing has only deteriorated.4
The exposure is not uniform. The Spain-Italy comparison, examined publicly this year, captures the split. Gas sets the marginal power price more completely in Italy than in Spain, where a larger renewables share has reduced the generation stack's gas sensitivity. At TTF above €75 a megawatt-hour, that structural difference flows directly into industrial power bills, with Italian manufacturers absorbing more of the Hormuz-linked cost than Spanish ones.4
Alternative supply corridors do not close the gap. Azerbaijan shipped about 12.8 billion cubic meters to Europe through the Southern Gas Corridor in 2025, little changed from the previous year and modest against Europe's roughly 335 billion cubic meters of annual consumption, War on the Rocks noted in late August (2026-08-26). The frequently cited expansion of the Trans-Anatolian pipeline to 31 billion cubic meters is engineering headroom, not a funded plan. A key transit pipeline with nameplate capacity of 1.2 million barrels a day moved about 565,000 barrels a day through all of 2025, under half its rated capacity and down almost 8% on the year.2
The spread between Dubai crude at $116.35 a barrel and ICE Brent front-month at $100.84 on Monday (2026-09-21) shows that Gulf-market dislocation has not unwound. Europe's gas system absorbed the initial Hormuz shock by running on efficiency gains built before the crisis hit. The Trans-Anatolian expansion needs a funded construction schedule, not just an engineering ceiling, before Europe faces another injection season. It does not have one yet.2