Europe has long imagined itself a global strategic power with the agency to shape its own destiny. Yet the geopolitical landscape of recent years has revealed a far more uncomfortable reality. Whether Europeans like it or not, the European Union’s (EU) economic stability is increasingly determined by forces outside its borders.

In the east, the war in Ukraine has bound Europe’s energy and security outlook to Russia. To the south, a widening conflict between Israel and Iran is beginning to tie the Union’s economic future to decisions made in Jerusalem.

This shift is structural rather than ideological. A war involving Iran immediately reverberates through global energy markets. Iran sits near one of the most critical maritime passages for global oil trade. Even the possibility of disruption sends markets into turbulence.

Europe is particularly vulnerable to these shocks. After cutting its reliance on Russian pipeline gas following the invasion of Ukraine, the continent replaced much of that supply with more expensive liquefied natural gas and imports from distant suppliers. As a result, Europe is now deeply exposed to the volatility of global energy markets.

If the conflict between Israel and Iran continues or intensifies, energy prices will almost certainly rise further. Shipping costs increase, traders price in........

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