Iran Conflict Sends Shockwaves Through European Markets: Winners and Losers Emerge
Eighteen days into the conflict in Iran, European equity markets are feeling the strain. Benchmark indices have shed around 7% since hostilities began, with the Euro STOXX 50 down 6.5%, Germany’s DAX off 7%, France’s CAC 40 down 7.2%, and Italy’s FTSE MIB lower by 6.4%. This contrasts with the more modest 2.5% decline in the US S&P 500, benefiting from its position as a major oil producer and relative insulation from the energy shock.
The Energy Price Surge: A Continent Reshaped
The most immediate impact of the conflict has been a dramatic increase in energy prices. Iran’s disruption to the Strait of Hormuz – a critical waterway for global oil transport – caused Brent crude to jump from around $70 to nearly $120 per barrel within days. As of Tuesday, Brent crude sits at approximately $105, a 42% rally from pre-war levels.
International efforts to stabilize prices, including a coordinated release of 400 million barrels of oil from emergency reserves by over 30 nations, have had limited success. The oil market has signaled that this release is insufficient to address the supply disruption, with crude prices surging more than 17% since the announcement.
Natural gas prices have been even more severely affected. The Dutch TTF benchmark, a key European gas price reference, has surged 60% to €52 per megawatt-hour. Analysts at Goldman Sachs warn that approximately 80 million tonnes per annum of LNG supply – 19% of the global total – is currently offline due to disruptions in the Strait and shutdowns in Qatar.
Beneficiaries of the Crisis: Energy, Renewables, and Fertilizers
European oil and gas producers are experiencing significant gains. Norwegian energy giant Equinor has surged 23.7%, attracting investors seeking exposure to a major oil and gas producer outside the conflict zone. Vår Energi is up 19.9%, and Aker BP has gained 17.1%. Italy’s Eni is up 14.7%, and Portugal’s Galp Energia has added 13.6%.
Surprisingly, biofuels producers are as well thriving. German renewable fuels producer Verbio SE has shot up 30.4%, and Finland’s Neste Oyj – the world’s largest producer of renewable diesel – has gained 28.1%. As conventional fossil fuels become more expensive and supply chains become precarious, renewable energy alternatives are becoming increasingly attractive.
German gas utility Uniper SE, which has been diversifying away from Russian supply, has rallied 19.1%. The fertilizer sector is also benefiting, with K+S rising 15.3% and Yara International rising 15.0%, reflecting a supply crisis as roughly one-third of global seaborne fertilizer trade passes through the Strait of Hormuz.
Industries Under Pressure: Airlines, Steel, and Construction
Conversely, energy-intensive industries and businesses with limited pricing power are facing significant losses. Airlines have been particularly hard hit. Wizz Air has collapsed 31.2%, Air France-KLM has lost 22.1%, and easyJet has dropped 21.8%, all grappling with soaring jet fuel costs and limited ability to pass those costs onto passengers.
Steel producers are also struggling. Salzgitter has fallen 27.9%, thyssenkrupp is down 27.3%, and ArcelorMittal has shed 19.1%, alongside stainless steel specialist Aperam, which has dropped 24.5%. Steel production is an energy-intensive process, and mills operating on thin margins are facing a profitability crisis.
Spanish engineering contractor Técnicas Reunidas has dropped 23.7% due to its exposure to Middle Eastern energy infrastructure projects now facing uncertainty. Construction group Webuild has fallen 26.6%, reflecting fears that an energy-driven slowdown will freeze infrastructure investment. Mining company Hochschild rounds out the list, down 21%, as rising energy costs compress margins and risk appetite for smaller extractive companies evaporates.
Europe’s Vulnerability and the Path Forward
Europe’s structural vulnerability to energy supply disruptions remains a key concern. Despite reducing dependence on Russian pipeline gas, the continent remains sensitive to supply shocks, and gas storage levels heading into 2026 are lower than in previous years.
Did you know? Approximately 20% of the world’s petroleum flows through the Strait of Hormuz, making it a critical chokepoint for global energy supplies.
Pro Tip: Investors should carefully assess the energy intensity of companies in their portfolios and consider diversifying into sectors less vulnerable to energy price fluctuations.
FAQ
Q: What is the biggest impact of the Iran conflict on European markets?
A: The biggest impact is the surge in energy prices, which is disproportionately affecting energy-intensive industries.
Q: Which sectors are benefiting from the current situation?
A: Oil and gas producers, renewable energy companies, and fertilizer producers are benefiting from the increased prices, and demand.
Q: What is the outlook for European gas prices?
A: Analysts predict continued volatility and potentially higher prices, with some forecasting a TTF price of €63/MWh for the second quarter of 2026.
What are your thoughts on how these market shifts will impact long-term investment strategies? Share your insights in the comments below!
