European economy faces crisis risk amid escalating Middle East conflict
The European economy may confront a crisis and endure only about a month due to escalating tensions between the US, Israel, and Iran. Oil prices have already risen above $80 per barrel, and gas prices in Europe have surged by 60%, heightening inflation risks. If the conflict remains short-lived, the damage is expected to be limited.
However, a prolonged war could sustain elevated energy prices, driving inflation higher and reducing GDP in developed countries. Troubles are intensifying as Iraq has halted oil exports from Kurdistan to the Turkish port of Ceyhan—approximately 200,000 barrels per day—after producers cut output as a preventive response to the conflict escalation. Additionally, Iraq has shut down another well at the critical Rumaila oil field (around 1.5 million barrels per day) following the closure of the Strait of Hormuz.
This situation signals a potentially severe deterioration of Europe's economic outlook, underscoring the need for close monitoring of the conflict and its implications for the global energy market.
