Central Europe more resilient to supply shocks amid iran war, S&P says

Central Europe Strengthens Energy Resilience Amid Global Supply Shocks, Says S&P

Central and Eastern Europe's Response to Energy Supply Shocks

BUDAPEST, March 10 (Reuters) - Central and Eastern Europe has become more resilient to energy supply shocks following efforts to diversify sources since Russia's invasion of Ukraine in 2022, providing buffers against the economic impact of the war in the Middle East, S&P Global said on Tuesday.

The import-reliant region's financial markets were shaken by the U.S.-Israeli war on Iran, which drove up energy prices, central European currencies and bond yields before Tuesday's relief rally on hopes of de-escalation.

Initial Impact of the Ukraine War

"Central and Eastern Europe got hit very hard by the start of the Ukraine war, at which point they were very heavily reliant on energy and gas imports from Russia," Ravi Bhati, S&P's director for sovereign ratings in EMEA, told an online forum.

"And very quickly ... they had to scramble and look for alternative sources. So in that sense, they've really become much more resilient to supply-side shocks," he said, citing a renewable energy drive and access to global liquefied natural gas supplies.

Country-Specific Diversification Efforts

Poland Leads Diversification

POLAND LEADS DIVERSIFICATION

Poland, the region's largest economy, launched its first LNG terminal in 2015 and has more lately built several pipeline links with neighbours to wean itself off Russian supplies.

Energy Independence and Infrastructure

Thanks to its location on the Baltic, Poland is also independent of Russian oil and even supplies two German refineries via Gdansk oil import terminal.

Warsaw is building some 6 gigawatts of offshore wind on the Baltic and a nuclear plant at the seashore.

Czech Republic's Shift in Energy Sources

Meanwhile, the Czech Republic has turned to gas from Norway and LNG, received mainly through a Dutch terminal. In 2025, it also ended its reliance on Russian oil supplies when it completed upgrades along the TAL pipeline in the west allowing it enough capacity along that route to fully meet its annual needs.

Hungary's Continued Reliance on Russian Energy

Hungary, however, still gets 75% of its gas and nearly all of its oil needs from Russia. Its currency and bond markets were among the hardest-hit in Central Europe in the past days due to its strong reliance on cheap energy and high import needs.

(Reporting by Gergely Szakacs, Marek Strzelecki and Jason Hovet, editing by Andrei Khalip)