The Iran war's disruption to global fuel markets has cost European taxpayers 25 billion euros ($29 billion) in additional oil and gas imports during just the first 54 days of conflict, according to European Commission President Ursula von der Leyen, underscoring the urgent need for the bloc to establish alternative energy routes that bypass geopolitical chokepoints like the Strait of Hormuz.
European leaders are now turning to market-based solutions and strategic partnerships with Gulf states and India to reduce dependency on vulnerable supply chains. Von der Leyen told G7 leaders at this week's summit that "alternative export routes have been created that are more resilient and offer choices" while "other routes will be built — for example, a typical one is IMEC."
The India-Middle-East-Europe Corridor
The India-Middle-East-Europe Economic Corridor (IMEC) represents a cornerstone of Europe's strategy to achieve greater economic resilience, supply-chain diversification and energy security. The initiative aims to bolster the bloc's strategic autonomy at a time when Russia shows few signs of curbing its belligerence and the U.S. chips away at strategic bonds.
The EU itself has supported IMEC through a memorandum of understanding, but only a handful of its 27 member states are formal signatories. A high-ranking EU diplomat, who spoke on condition of anonymity because he wasn't authorized to disclose the contents of confidential discussions, said political commitment to IMEC is strong behind the scenes. "The focus now is on translating that vision into practical implementation across its three pillars: transport and trade connectivity, energy connectivity and digital connectivity," the diplomat said. He said it could involve new pipelines and transmission cables, among other infrastructure.
IMEC would pass through Israel and enjoys its support. Israeli Prime Minister Benjamin Netanyahu said last year he had spoken with his Indian counterpart Narendra Modi about IMEC, calling it "a very revolutionary and transformative development that we want to bring into place." Lianne Pollak-David, co-founder of the Israel-based Coalition for Regional Security, told a recent online briefing that U.S. leadership would be key to moving IMEC forward by helping in the normalization of relations between Israel and Saudi Arabia, an essential player in the project. "Without normalization between Israel and Saudi Arabia, IMEC cannot be truly realized," she said.
Saudi Arabia has said it will only normalize relations with Israel if accompanied by a clear pathway to Palestinian statehood, something Netanyahu opposes. It remains unclear how the Iran war, launched by the U.S. and Israel and damaging to Gulf Arab countries, may influence Saudi Arabia's thinking. Asked about their position regarding IMEC, Saudi officials declined to comment.
Private Sector Solutions and Infrastructure Development
Von der Leyen and European Council President Antonio Costa said during an EU leaders' meeting in April that the bloc is "ready to team up with Gulf countries" to help set up new energy infrastructure circumventing conflict hot spots like the Strait of Hormuz. The value of such alternatives is evident in the East-West Pipeline running across Saudi Arabia from its eastern oil fields to the Red Sea. After the Iran war started, Aramco ramped up transport to the maximum capacity of 7 million barrels of oil per day.
The leaders of G7 nations are discussing ways of financing and building infrastructure, "sometimes on the terrestrial part, that will be able to go outside of the track of the Strait of Hormuz," French Foreign Ministry spokesperson Pascal Confavreux told The Associated Press. An EU official told the AP that the bloc would encourage European companies to invest in renewable energy projects in the Gulf to supply the EU's energy demand. The official spoke on condition of anonymity because they can't speak about the EU's plans publicly.
Getting the EU involved with collaborative projects in Gulf countries will take time, according to Gabriel Mitchell, an analyst with the German Marshall Fund think tank. The most likely projects in the near term are oil and gas pipelines, which have the shortest construction timeline, and subsidizing repairs at Gulf facilities that Tehran targeted during the war. Mitchell said any new projects would need to fall in line with the EU's green policies, which means pipelines, for example, would likely be built with future "dual-use" capabilities of transporting both gas and possibly hydrogen.
Energy Grid Connectivity
Another project is the Great Seas Interconnector, an EU-backed electricity cable envisioned to stretch 1,208 kilometers (750 miles) to connect the power grids of continental Europe with EU member Cyprus and eventually Israel. The GSI is bogged down in red tape over its financing, but its potential is significant not only for ending the energy isolation of Cyprus and Israel but also acting as an energy link to India and likewise forming part of IMEC.
Gallia Lindenstrauss, senior fellow with the Israel-based Institute for National Security Studies, called GSI a "very pragmatic solution for the modern energy needs" that paves the way for the transition to green energies. "As energy security and grid backup move to the forefront of the global agenda, this project provides a flexible platform," Lindenstrauss said.
The U.S. is helping to foster closer energy ties among Greece, Cyprus and Israel as it sees the Eastern Mediterranean as "an increasingly important region for global energy development," U.S. Secretary of Energy Chris Wright said last week. Wright was in Houston to inaugurate the Eastern Mediterranean Energy Center at Rice University, which aims to boost cooperation on developing natural gas deposits, U.S. liquefied national gas infrastructure and energy transportation networks in the European region.
Von der Leyen has said the EU in the first 54 days of the Iran war faced the risk of a longer-term jet fuel shortage in addition to the 25 billion euro cost increase. Neither von der Leyen nor Costa have provided specifics on EU-backed projects, which could also form part of IMEC. The EU's press office declined to provide a prospective timeline for the project.
Why This Matters:
The Iran war has exposed European taxpayers to billions in additional energy costs while demonstrating the fiscal vulnerability of relying on geopolitically unstable supply routes. The 25 billion euro price tag for just 54 days of conflict underscores the urgent need for market-driven infrastructure solutions that reduce government exposure to foreign policy crises. IMEC and related projects represent a pragmatic approach to energy security through private investment, strategic partnerships with stable Gulf states, and diversified supply chains that bypass conflict zones. The success of Saudi Arabia's East-West Pipeline in maintaining 7 million barrels per day capacity during the war demonstrates the value of terrestrial alternatives to vulnerable maritime chokepoints. However, bureaucratic delays on projects like the Great Seas Interconnector and the absence of clear timelines raise questions about whether European institutions can move quickly enough to protect consumers and businesses from future price shocks. The reliance on private European companies to invest in Gulf renewable projects reflects recognition that government-led initiatives alone cannot deliver the speed and scale required for genuine energy independence.