The European Central Bank (ECB) has explained why energy prices rose far less during the conflict involving Iran than they did following Russia's invasion of Ukraine, despite the scale of the disruption to global energy supplies.
In a blog post authored by Lea Demuth, Ana-Simona Manu and Arthur Stalla-Bourdillon, the ECB notes that both the war in Ukraine and the conflict involving Iran produced significant energy shocks and led to higher energy prices. However, the two crises differed markedly in both scale and market impact.
According to the analysis, although disruptions to global oil and gas supplies were substantially greater during the Iran conflict, the resulting increases in energy prices have so far remained comparatively contained.
Massive blow to oil supply
The ECB blog notes that military attacks involving the United States, Israel and Iran in late February 2026 led to the closure of the Strait of Hormuz.
This disrupted the transit of approximately 20 million barrels of oil per day, equivalent to one-fifth of global oil supply.
Although pipeline networks in Saudi Arabia and the United Arab Emirates partially mitigated the disruption, the conflict has nevertheless resulted in an average supply loss of around 14 million barrels per day, representing roughly 14% of global oil supply.
By comparison, the war in Ukraine reduced oil supply by only around 1 million barrels per day, or approximately 1% of global production, as most of Russia's oil output of around 10 million barrels per day continued reaching global markets despite sanctions.
The ECB describes the scale of the disruption resulting from the Iran conflict as unprecedented.
However, the reaction of oil prices in 2026 has been surprisingly restrained.
According to the authors, this may reflect expectations that the supply shortage will prove temporary.
Based on historical data, a disruption of this magnitude would normally be expected to push oil prices up by as much as 105%.
Yet by early June, oil prices stood at only $94 per barrel, around 29% above their pre-conflict level, having retreated from an earlier peak increase of more than 50%.
Similarly, prices rose by around 30% at their peak after Russia's invasion of Ukraine, despite the much smaller supply shock.
That increase also proved short-lived, with prices stabilising at lower levels by August 2022.
Markets were better prepared this time
Alongside expectations for a relatively rapid resolution to the conflict, the ECB argues that oil prices remained comparatively contained because markets were in a much stronger position to absorb supply disruptions than they had been in 2022.
The authors also point to a more forceful policy response.
A coordinated release of 400 million barrels of strategic oil reserves by the International Energy Agency (IEA) significantly exceeded the 182 million barrels released during the Ukraine-related energy crisis in 2022.
Together, these factors help explain why a much larger supply shock translated into a comparatively moderate rise in oil prices.
Similar gas disruption, smaller price reaction
The contrast between the two crises is also evident in natural gas markets.
Both conflicts resulted in supply losses equivalent to approximately 9% of total gas demand across Europe and Asia, but they differed in the type of gas affected and in the regions most directly exposed.
The conflict involving Iran disrupted the global liquefied natural gas (LNG) market.
The Strait of Hormuz accounts for approximately 20% of global LNG supply, equivalent to around 110 billion cubic metres annually.
By contrast, the Ukraine war primarily disrupted pipeline gas supplies.
Its effects were concentrated in Europe, where Russian gas exports declined by approximately 126 billion cubic metres during 2022.
Nevertheless, as in oil markets, the reaction of gas prices during the Iran conflict has been significantly more restrained than historical experience might suggest.
By early June, prices at the Title Transfer Facility (TTF), Europe's benchmark natural gas hub, had risen by 53% to €49 per megawatt-hour (MWh).
Historical estimates would have suggested an increase of around 81%, broadly consistent with the 79% rise observed during the Ukraine crisis.
A key lesson
The comparison between the wars involving Iran and Ukraine highlights an important lesson, the ECB argues.
The scale of an energy supply disruption alone does not determine how prices will respond.
"Initial market conditions, inventories, demand flexibility and expectations can be equally important."
According to the authors, expectations of a quick end to the conflict, stronger oil and gas market fundamentals before the crisis and greater flexibility in Asian demand have all helped contain the impact on energy prices so far.
However, they stress that conditions in the Strait of Hormuz, and by extension global energy markets, remain highly fragile, particularly following the latest rise in energy prices.
A prolonged closure would gradually deplete existing inventories and strategic reserves while forcing markets to abandon expectations of a rapid resolution, increasing the risk of renewed upward pressure on prices.
Conversely, a sustained reopening of the strait could place significant downward pressure on prices, particularly given that oil and gas markets entered 2026 expecting substantial supply surpluses.
According to the ECB, those expectations may become even more pronounced if the conflict encourages consumers to switch more rapidly to alternative and more reliable sources of energy, reducing dependence on oil and natural gas.
