Middle East conflict

Inflation could be significantly higher this year due to the war in the Middle East, the CPB warns in its latest forecast. Both the baseline estimate and the risk scenario carry considerable uncertainty. If energy markets remain disrupted, inflation could end up more than a quarter higher than in the CPB’s standard projection, which currently expects inflation to ease to 2.3 percent. It remains highly uncertain how long the conflict will impede oil and LNG shipments through the Strait of Hormuz or prompt Gulf states to reduce energy production.

Around 9,000 Dutch citizens in the Middle East have registered with the Ministry of Foreign Affairs for emergency assistance as the Friday afternoon deadline for applications approaches. While the high number of submissions highlights widespread concern, officials clarified that this does not represent the exact number of people requiring repatriation, as some travellers have already departed independently or submitted duplicate forms. Assistance is strictly reserved for Dutch nationals and their family members who reside in the Netherlands; consequently, those living permanently in the region, such as in Dubai, are not eligible for government-led evacuation flights.

The ECB is on guard about the impact of the Middle East conflict on eurozone inflation amid sharply rising oil and gas prices. Policymakers call the situation volatile and say it is too early to judge the implications for future rate decisions; the bank is expected to hold rates at its next meeting.

European gas prices jumped by more than 9% on Thursday morning, reaching €53.26 per megawatt-hour on the Amsterdam exchange as the conflict between the United States, Israel, and Iran entered its sixth day. Although a US-led plan to protect shipping briefly steadied markets on Wednesday, the continued closure of the Strait of Hormuz has fueled fears of a long-term energy shortage. This latest price spike was triggered by Iranian claims of an attack on an American tanker in the Persian Gulf, leaving traders increasingly worried about the security of vital global fuel supplies.