Mideast conflict sends energy, economic shockwaves across Europe in World Economy News 31/03/2026 One month after the United States and Israel launched military strikes on Iran, rising energy prices and supply risks are rippling through Europe’s economies. Oil and gas prices have surged, shipping routes have been disrupted, and power markets are tightening, adding to inflationary pressure and weighing on industry and households. Analysts observe that these developments underscore Europe’s vulnerability regarding imported energy, placing significant strain on both its economic resilience and its green transition strategy. SOARING ENERGY PRICES Escalating tensions in the Middle East have driven a sharp rise in energy prices, despite coordinated efforts by the International Energy Agency to release strategic oil reserves. European Commission President Ursula von der Leyen said the European Union’s bill for oil and gas imports had increased by around 6 billion euros (6.42 billion U.S. dollars) since the conflict began. Benchmark Dutch TTF natural gas futures, Europe’s main pricing reference, have jumped nearly 80 percent over the past month, while Brent crude futures in London have surged by more than 40 percent. The rise in gas prices is particularly significant for Europe, where electricity prices are closely tied to gas markets. Goldman Sachs Co-Head of Global Commodities Research Daan Struyven estimated that around 60 percent of European power prices are linked to natural gas, increasing the region’s exposure to energy shocks. Economic forecasts are being revised. The Organisation for Economic Co-operation and Development (OECD) on Thursday cut its euro zone growth forecast for this year to 0.8 percent and raised its inflation outlook to 2.6 percent. The European Central Bank also lowered its growth projection to 0.9 percent while lifting its inflation forecast to around 2.6 percent. More worrying for policymakers is a potential shift from price pressures to supply risks. Shell CEO Wael Sawan warned that Europe could face fuel shortages within weeks if disruptions to Middle East oil flows persist. Germany’s economy and energy minister, Katherina Reiche, said energy supply pressures could intensify between late April and May if the conflict drags on. STRAINED INDUSTRIAL SECTOR Europe’s industrial sector, already strained by high energy costs following the phase-out of Russian gas after the Ukraine crisis, is facing renewed pressure. Oil is not only a key transport fuel but also a critical industrial input. Rising prices are pushing up logistics costs while feeding through into manufacturing via raw material channels, weighing on energy-intensive sectors. At the same time, European companies are contending with lingering U.S. tariff pressures and weak external demand, creating a combination of headwinds that is tightening operating conditions across manufacturing. At the macro level, economists warned that elevated energy prices and supply uncertainty could have a systemic impact on Europe’s industrial base, particularly in Germany and Italy. European Central Bank President Christine Lagarde said firms could respond faster to rising costs from the Iran-related oil shock, reflecting recent experience with inflation since the Ukraine crisis. “The response of firms and workers may be faster than last time. We have a more recent memory of high inflation, which could affect how quickly costs are passed on,” she said. At the sector level, agric