Supply Fears Send EU Diesel Prices Soaring As Bloc Exposed To Strait Of Hormuz Risks

European diesel prices rallied for a fifth straight session, driven by mounting anxiety that critical Middle East shipping lanes could be choked off. The conflict between Israel and Iran has raised alarm bells across the EU, which has become increasingly dependent on fuel shipments transiting the Strait of Hormuz since losing access to Russian supplies. 

“Supply-security fears are driving the surge in European diesel prices,” Eugene Lindell, head of refined products at energy consultancy FGE NexantECA, told Bloomberg. “Many importers are rushing to restock now, in case a prolonged disruption occurs due to a potential blockade of the Strait of Hormuz,” he added.

Here are the key points of strength in the European diesel market because of Hormuz blockade fears:

• Diesel’s premium to crude jumped above $25 a barrel, highest since March 2024.

• Backwardation widened sharply, with July diesel now $21.25/ton above August, and December 2024 trading $45.25/ton above December 2025 — up from just $0.50 on June 9.

• Traders rushed to unwind bearish bets, closing out over 100,000 gasoil futures contracts, the most in any 4 days since 2021.

According to Bloomberg estimates, Europe imported approximately 850,000 barrels a day of diesel last year through the Strait of Hormuz. This critical maritime chokepoint leaves Europe highly vulnerable to regional instability and potential supply disruptions.

Europe has become more susceptible to disruptions in the Strait of Hormuz due to a combination of increased structural dependency, limited local refining capacity, and a post-Russia supply realignment:

• Europe banned Russian diesel imports following the Ukraine invasion, cutting off its largest and most reliable supplier.

• As a result, Europe pivoted heavily to the Middle East, especially the UAE and Saudi Arabia, to fill the gap—much of that supply transits Hormuz.

Nice work, Brussels. The Strait of Hormuz stands as a massive single point of failure—any disruption in this critical chokepoint risks triggering a shockwave across European energy markets. Fresh data shows vessel traffic through the strait is already slowing (read more here).