EU warns of 'stagflationary shock' if Iran war is prolonged

According to a post on X by Walter Bloomberg, the EU is set to lower its growth forecast and raise its inflation outlook due to the war in Iran. EU Commissioner Valdis Dombrovskis described the situation as a "stagflationary shock." He explained that with international oil prices exceeding $100 per barrel and ongoing concerns about supply disruptions in the Strait of Hormuz, the bloc is facing a combination of slowing growth, rising prices, and a reduced capacity for policy response. The EU also warned that a prolonged conflict could worsen energy supply bottlenecks, with inventory and price pressures potentially extending into 2027.