European financial markets are under strain as the U.S.-Israeli war on Iran revives concerns about an energy supply shock exacerbating inflation.ING says the euro…
European financial markets are under strain as the U.S.-Israeli war on Iran revives concerns about an energy supply shock exacerbating inflation.
ING says the euro zone is the most exposed major economy to the conflict, making the region, which has benefited from investor diversification out of U.S. assets, vulnerable to setbacks.
Not Good, But 2022 Was Worse
The jump in oil and gas prices evokes memories of Russia's invasion of Ukraine in 2022, which triggered a global energy crunch and hit Europe particularly hard.
Since Friday, Brent crude LCOc1 is up nearly 10%, while European natural gas prices have shot up 50%. The region is almost entirely dependent on imports for oil and gas.
Major liquefied natural gas exporter QatarEnergy said on Monday it had halted production, while global oil and gas shipping rates have soared.
But, unlike 2022, European buyers don't have to wean themselves off one major energy supplier, as they did with Russia and this conflict has erupted as winter heating demand ebbs.
Furthermore, the euro is still some 4% higher than in February 2022 EUR=. So, barring a spike in the dollar, euro strength helps limit energy import bills. By contrast, other big
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