Traders are snapping up protection against a weaker euro as climbing crude oil prices threaten to unravel the currency’s recent recovery. The move reflects growing unease that Europe’s energy-import dependency could once again become its biggest economic liability.
The oil shock that rewrote the playbook
The US-Iran conflict that began on February 28, 2026, sent Brent crude on a tear that most energy traders hadn’t seen in years. Prices surged more than 40% in March alone, with Brent hitting peaks between $119 and $124 per barrel.
The catalyst was straightforward: fears about disruptions in the Strait of Hormuz, the narrow maritime chokepoint through which a significant share of global oil supply flows.
For Europe, which imports the vast majority of its energy, the price spike landed like a gut punch. Inflation in the euro area climbed toward 3% by April 2026, forcing the European Central Bank into an awkward position. The ECB responded by raising its benchmark interest rate from 2.0% to 2.25%, the first hike since 2023.
