Analysts warned that the ongoing U.S.-Israel war with Iran is expected to weigh on European economic growth and boost inflation as energy costs remain elevated. The effective closure of the Strait of Hormuz has disrupted oil and gas shipments, pushing Brent crude above $100 per barrel at times since the conflict began in late February.
European economies already facing sluggish growth are particularly exposed because of dependence on imported energy. The European Central Bank has flagged upside risks to inflation from commodity prices. Manufacturing sectors reliant on stable energy inputs have reported rising costs and supply chain delays.
Morgan Stanley described the oil market as in a race against time, warning that cushioning factors such as higher U.S. exports and softer Chinese demand may fade if the strait remains closed into June. Saudi Aramco CEO Amin Nasser said disruptions could delay market stability until 2027, with roughly 100 million barrels per week potentially affected.
European governments have released strategic petroleum reserves to moderate prices. Consumer confidence surveys show growing anxiety about heating and transport costs. Economists said a prolonged conflict could force the ECB to delay interest rate cuts and complicate fiscal planning across the eurozone.
The European Central Bank has cited commodity-driven inflation as a risk to its rate-cutting timeline. European manufacturing purchasing managers’ indices have shown contraction in several major economies since the strait closure disrupted energy imports from the Gulf region.
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Sources:
https://www.britannica.com/event/2026-Iran-war