Europe Is Now Facing Its Second Energy Crisis in 4 Years. Here's What That Means.

Geopolitical crises tend to beget other crises. On that note, the European energy benchmark, Dutch TTF natural gas, nearly doubled by mid-March after the Feb. 28 strikes on Iran resulted in the cessation of traffic through the Strait of Hormuz. European gas storage entered the crisis well below normal levels, now leaving the continent racing to refill its reserves.

If the scenario sounds familiar, it's because around four years ago, Russia's invasion of Ukraine severed European pipeline gas supplies and sent power bills spiraling higher across the continent. This time, the trigger is different, but the financial implications for U.S. investors with European-exposed holdings are somewhat similar. Let's walk through the implications of this emerging energy crisis.

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This may be a mammoth of a supply shock

The 2022 energy crisis was a slow-motion decoupling from Russia-supplied pipeline gas, giving markets months to adapt.

In contrast, this energy crisis was abrupt, starting when the Strait of Hormuz effectively closed in early March, cutting off roughly a fifth of the world's seaborne liquefied natural gas (LNG). Now, with the waterway still closed, and with some oil production infrastructure in questionable condition -- for instance, damage to Qatar's Ras Laffan export complex is expected to keep it offline until at least August -- recovering from the energy shock might take a bit longer than hoped.

Europe has to refill its reserves over the coming summer. Buyers will be bidding against others worldwide, especially in manufacturing hubs, for every bit of LNG available.

That means the biggest challenge for U.S. multinationals in Europe is likely to be much higher energy costs, or even energy shortages, both of which could be a headwind for their earnings and, by extension, their stock prices.

Which multinationals might benefit, and which could suffer?

For U.S. companies that manufacture and sell heavily in Europe, the crisis creates a pincer.

Higher energy costs squeeze manufacturing margins, while rising household bills for all goods, especially food, erode the spending power of European customers. Food prices are especially inclined to increase at the moment because many of the fertilizers needed to produce a sufficient volume of crops are also unable to transit out of the Strait of Hormuz.

Let's now turn to which companies will be most affected by these dynamics.

Procter & Gamble (NYSE: PG) runs energy-intensive manufacturing across Europe for detergents, paper goods, and personal care products, among others. Even before the Iran war's energy shock, the company had cut its fiscal 2026 earnings-per-share (EPS) growth forecast to a range of 1% to 6%, down from an earlier range of 3% to 9%, citing concerns with the declining purchasing power of consumers. Higher gas and electricity input costs will now compound the demand-side weakness.

Mondelez International (NASDAQ: MDLZ), the food company behind a bunch of popular brands, including Oreo, Cadbury, and Toblerone, derives 39% of its revenue from Europe, and it also runs substantial manufacturing operations there for chocolate and biscuits. Thanks to the many ovens the business needs to operate to produce goodies, not to mention the cost of fuel for the vehicles that distribute its products, it's significantly exposed to energy costs.

In other words, for both of these consumer staples companies with significant European operations, this crisis could be very destructive to their margins.

But one investor's energy crisis is another's windfall.

ExxonMobil (NYSE: XOM) could capture the other side of the energy crisis, despite the drag from some of its Middle Eastern production capacity being offline. Higher crude oil prices will boost its upstream business, and its global LNG portfolio will be selling into a market where European buyers are paying premiums, all while its refining margins have widened as product markets dislocate.

Similarly, Chevron could also benefit. Its large Australian LNG operations directly benefit from the global supply squeeze, and its upstream position will capture the upside from higher crude prices.

The biggest variable remains the ceasefire.

If a durable U.S.-Iran deal materializes and the current ceasefire actually leads to the conflict's end, European gas prices might retrace sharply, immediately cooling the tailwind for energy stocks Exxon and Chevron. But even then, Europe still needs to refill its depleted storage before winter arrives, and some Middle Eastern production capacity will be slow to return. So don't bet on a speedy recovery.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.