Which European countries are most and least affected by the conflict in the Middle East? Energy dependence is the key
5 MAR, 2026
By Alvise Lennkh
By Alvise Lennkh-Yunus, director of sovereign and public sector ratings at Scope Ratings
Europe is well positioned to absorb a temporary increase in energy prices, but vulnerabilities vary between countries due to the diversity of their energy mixes. In the case of the United States, the war could lead to higher fiscal costs and deepen political divisions ahead of the midterm elections.
The economic, fiscal, political, and credit implications of the war between the United States, Israel, and Iran for countries will depend on the duration and severity of the conflict, the extent of regional spillovers to energy supply, and the resilience of individual sovereign credit profiles.
In the event of a short and largely localized military conflict, macro-financial consequences will likely be manageable for all countries. In this scenario, central banks and fiscal authorities would likely take a transparent approach to temporary inflationary pressures.
However, if the military operation were to evolve into a prolonged regional conflict, the countries most affected would likely be:
- countries directly involved in military operations or geographically close to them, among which we publicly rate only the United States (AA-/Stable) and Turkey (BB-/Stable)
- economies significantly exposed to global and Middle Eastern oil and gas supply chains, and/or
- sovereigns with limited fiscal buffers to absorb the potential social and economic effects of stagflationary pressures.
Prolonged instability in the Middle East would have major global repercussion
Although Iran accounts for a relatively small share of global oil exports (less than 5%), more than 30% of the world’s seaborne oil supply passes through the Strait of Hormuz, including exports from Saudi Arabia, the United Arab Emirates (UAE), Iraq, and Kuwait. Around 20% of globally traded liquefied natural gas (LNG) also comes from Qatar and the UAE.
Any prolonged disruption to export facilities, energy infrastructure, or the Strait of Hormuz itself, combined with increased regional instability, would increase the risk of a supply crisis. This could translate into higher oil and natural gas prices and therefore have economic, fiscal, and even political implications worldwide.
Europe is particularly vulnerable through imports of fossil energy, especially LNG
Europe’s continued reliance on imports of oil and liquefied natural gas (LNG) increases the region’s vulnerability to prolonged price and supply shocks.
Although EU gas storage levels are currently relatively low—around 30% of capacity (compared with 38% at the same time last year)—weather-dependent demand is expected to fall significantly as winter ends.
Additionally, Europe’s energy sources are now more diversified than at the start of Russia’s war in Ukraine, while inflation was close to the ECB target at 1.9% in February 2026.
In this context, gas prices (TTF) are unlikely to return to the highs seen in 2022, when they averaged €133/MWh, three times the €36/MWh average in 2025.
Even so, sustained high gas prices (TTF near €50/MWh) and oil prices around $100 per barrel could have macroeconomic implications.
According to ECB estimates, such a scenario would:
- increase eurozone inflation by around 1.25 percentage points in the medium term
- potentially delay the pace of monetary policy easing.
Similarly, higher energy prices, together with uncertainty and international spillover effects, could reduce eurozone growth by around 0.75 percentage points.
Such an adverse scenario would still be significantly less severe than the impact of the escalation of the war in Ukraine, which:
- increased inflation by about 10 percentage points
- reduced growth by about 4 percentage points relative to the pre-war baseline scenario for the eurozone.
Since then, Europe’s energy intensity has fallen by around 25%, which should reduce the negative impact of future energy price shocks on growth.
Among the major EU economies, France is the least exposed
Across the EU, about 20% of oil and petroleum product imports come from Middle Eastern countries directly affected by the current conflict.
Within Europe, the energy mix of several countries depends heavily on oil and gas, increasing their vulnerability to price increases. These include:
- Malta (A+/Stable)
- Cyprus (A/Stable)
- Ireland (AA/Stable)
- Netherlands (AAA/Stable)
- Greece (BBB/Positive)
All of these rely on oil and gas for around 80% of their total energy consumption.
Cyprus, Greece, and Central and Eastern European countries among the most vulnerable to oil and gas price increases
When economic structure is also considered, countries that both rely heavily on oil and gas and have production with high fossil-fuel intensity are likely to be the most vulnerable to sustained increases in fossil fuel prices.
These include:
- Cyprus
- Greece
- Central and Eastern European countries such as Poland (A/Stable) and Bulgaria (A-/Stable).
Among the four largest EU economies:
- Italy (BBB+/Positive)
- Spain (A/Positive)
- Germany (AAA/Stable)
have similar levels of exposure given the composition and intensity of their energy mixes.
France (AA-/Negative), thanks to its large fleet of nuclear power plants, is less exposed to the potential impact of this shock.
However, the fiscal capacity to respond to such a shock varies significantly between countries, as reflected in their sovereign ratings.
The United States is mainly exposed through affordability pressures and fiscal costs ahead of the midterm elections
Since the United States is energy self-sufficient and an LNG exporter, higher energy prices could actually improve its current account balance.
However, affordability concerns, driven by rising inflation (already under pressure from tariffs), could intensify if the conflict becomes prolonged, worsening the cost-of-living situation and complicating economic policymaking.
A prolonged conflict could also lead to higher military spending and further intensify fiscal tensions at a time of uncertainty about tariff revenues following the Supreme Court ruling against the “Liberation Day” tariffs announced by Trump last April.
Political risks are also likely to rise. Public support for the war remains low, and U.S. military operations lasting more than 60 days require Congressional approval.
As a result, military action against Iran is likely to become highly politicized ahead of the November midterm elections.
