EU Says Prolonged Iran War Could Trigger Stagflation Shock
Summary
- The EU said a prolonged Iran war could trigger a stagflationary shock.
- It said crude oil prices could rise above $100 a barrel, while the EU would lower its economic growth forecast and raise its inflation outlook at the same time.
- It said energy supply bottlenecks and rising oil prices and global sovereign bond yields could keep price pressures in place through 2027.
Forecast Trend Report by Period
The European Union raised the prospect that a prolonged war involving Iran could trigger a stagflation shock, as surging energy prices add to pressure on growth.
Walter Bloomberg reported on May 18 that the EU plans to lower its economic growth forecast and raise its inflation outlook to reflect the fallout from the Iran war.
Valdis Dombrovskis, the European Commission commissioner, described the situation as a “stagflationary shock.”
Crude oil prices have climbed above $100 a barrel, while concerns persist over supply disruptions through the Strait of Hormuz. The combination is weighing on growth, lifting prices and narrowing room for policy action.
The EU also said a prolonged conflict could deepen energy supply bottlenecks, with inventory shortages and price pressures lasting through 2027.
Escalating tensions in the Middle East have recently driven up both global oil prices and sovereign bond yields.
Markets are focused on how energy supply risks and the possibility of renewed tightening by major central banks could ripple through global financial markets.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
