The war in the Middle East could become costly for people in the Netherlands. Economists at Rabobank say this after analysing several possible effects on the Dutch economy. In the bank’s worst-case scenario, petrol prices could peak at about €3 per litre, and a new energy contract could temporarily exceed €400 per month.
According to RaboResearch, this scenario could occur if key energy infrastructure in Qatar and Saudi Arabia were severely damaged. Oil prices could then rise to $150 or more per barrel, and gas prices to €125 per megawatt-hour. Inflation would climb above 4 per cent, while economic growth would fall by 0.6 percentage points. In this situation, the bank expects economic recovery to begin in 2028.
Rabobank has also explored less extreme outcomes. In one of these, petrol prices would remain around €2.25 per litre for a longer period. New energy contracts could continue to fluctuate between €240 and €250 per month in the spring.
Inflation shock
Credit insurer Allianz Trade shares similar concerns and has issued new forecasts for the eurozone. Its main scenario assumes the conflict will be short-lived. In that case, inflation would rise only briefly because oil prices would fall back relatively quickly after an initial spike.
But if the conflict in Iran continues for more than a few weeks, the picture changes, says Johan Geeroms, Benelux risk director at Allianz Trade. “It could lead to an inflationary shock like the one in 2022,” he says. With transit through the Strait of Hormuz now stalled, he warns that the real economy will face disruption. “Entire logistics chains will also be grounded. Containers will get stuck, and rerouting routes will take weeks longer, further increasing freight costs.”
Rabobank economists believe the current situation is unlikely to create an energy price shock as severe as the one seen in 2022, when Russia invaded Ukraine, and gas prices soared. They note that global interests are high and that countries such as China are pressuring Iran not to fully close the Strait of Hormuz.
@anp | NEWS BRAINPORT
