Commerzbank: Prolonged Middle East conflict could raise eurozone inflation by 1 percentage point

⑴ Jörg Krämer from Commerzbank stated in a report that if a prolonged war breaks out in the Middle East, it could push up the eurozone inflation rate by 1 percentage point and drag down economic growth by several percentage points. ⑵ However, he pointed out that if the war lasts only a few weeks, the eurozone economy would not be significantly affected. ⑶ Krämer noted that so far, Brent crude oil prices have responded mildly to the war and the de facto closure of the Strait of Hormuz. ⑷ He believes that since oil prices peaked at just above $80 per barrel during Asian trading hours, the market is hopeful that Iranian representatives may wish to negotiate. ⑸ He stated that a longer war could threaten oil prices to approach $100 per barrel, which is about 40% higher than the price in mid-February.