The Iran war may intensify inflation in Europe. According to Medianews.az, economists say that the rise in oil and gas prices could accelerate price increases in the eurozone and force the European Central Bank to raise its interest rate.
According to data from the "Fuelo" platform that tracks fuel prices in Europe, in Milan, the liter of AI-95 gasoline is 1.89 euros, and the liter of diesel is 2.10 euros. In Paris, the liter of gasoline is 1.92 euros, and the liter of diesel is 2.06 euros. Frankfurt remains the most expensive among these cities – there, the liter of AI-95 gasoline is 2.12 euros, and the liter of diesel is 2.19 euros.
The majority of European countries are importers of crude oil and gas. Therefore, the Iran war and the rise in energy prices directly affect the European economy and pose an inflation risk in Europe. Calculations show that a 10 percent increase in oil prices could raise inflation in the eurozone by approximately 0.3 percent.
According to estimates, if the price of a barrel of oil stabilizes around 80 dollars, inflation in the eurozone could rise to 2.5 percent in the short term but could drop below 2 percent after a while.
If the price of oil reaches 100 dollars and the price of gas rises to an even higher level, the average inflation in Europe could reach 2.4 percent in 2026, and economic growth could weaken.
Experts believe that the rise in energy prices can no longer be considered a temporary factor as before. Since shocks in energy prices affect inflation expectations, central banks may be forced to take tougher measures.
According to data from "Polymarket," a financial forecasting platform, markets currently assess the probability that the European Central Bank will raise interest rates in 2026 at 42 percent. Before the war started in Iran, this rate was only 12 percent.
Analysts believe that if energy prices remain high, the European Central Bank will be forced to tighten monetary policy again in the coming months.