What is the impact of rising energy prices?
The conflict in the Middle East is pushing up oil and gas prices. Threats from Iran have paralysed maritime traffic through the Strait of Hormuz, with tankers piling up on both sides. After deliveries from Qatar were suspended the price of liquefied natural gas (LNG) on the Amsterdam stock exchange jumped from below 32 euros on Friday to more than 62 euros per megawatt hour on Tuesday. Europe's press looks at the short-, medium- and long-term consequences.
Threats already having disastrous consequences
Hospodářské noviny is worried by the situation in the Strait of Hormuz:
“This lifeline of the global economy is little more than 50 kilometres wide at its narrowest point and only 220 metres deep. This means that it is particularly vulnerable to mines and attacks from small vessels or helicopters as well as drones, cruise missiles and rockets. Iran has repeatedly threatened to blockade the strait, but has never actually done it as this would incur the wrath of the US, the Gulf states and ultimately the whole world. However the Iranians needn't even resort to weapons; mere threats suffice. The insurance companies will do the rest. This makes passage through the strait so expensive that it is no longer worthwhile for any shipping company.”
Phasing out of Russian gas reconsidered
In IQ, economist Greta Ilekytė examines the consequences of natural gas shortages:
“After an exceptionally cold winter, gas reserves in Europe are lower than usual. ... If the disruptions in supplies through the Strait of Hormuz continue, competition for LNG will increase. Ships from the US originally bound for Europe will likely be diverted to Asian countries. If natural gas prices remain high, this will affect not only consumers but also businesses. ... The EU has committed to completely phasing out Russian gas imports by the end of next year. However rising energy prices could increase political pressure to reconsider or at least postpone this decision.”
Discontent will spread
The Irish Times notes that economic repercussions could take their toll:
“Particularly in Washington where higher fuel prices could add to public and political concern about Trump's decision to get involved in the first place. The US will also face pressure from Middle Eastern allies and those around the world if the war drags on. For Ireland, despite our distance from the conflict zone, the dangers are the same as for other developed countries. Higher oil prices will hit at the petrol pumps and on home heating bills, even if there is no justification for companies which have jumped the gun by implementing significant increases already.”
Tehran can hit where it hurts
Libération comments:
“The Iranian leadership knows that time is on its side. Tehran can prolong the suffering by attacking 'soft targets' in neighbouring countries, such as hotels or energy infrastructure, and by disrupting global maritime trade. ... This would be a strategy to maximise the cost of war. Inflation, a slowdown in trade, interest rate hikes by central banks, rising credit costs - all of this would trigger a globally spiralling crisis. We're not there yet, but even more than fatalities or the geopolitical balance it's above all economic pressure that could convince Trump to end the war.”
Climate policy is also security policy
The war in Iran once again highlights Europe's vulnerability resulting from its energy dependence, the Süddeutsche Zeitung argues:
“The energy price crisis triggered by Russia four years ago already provided ample reasons for phasing out coal, oil and gas faster. For a continent lacking in raw materials this is the strongest argument in favour of the green transition: energy dependence renders us vulnerable and thus turns climate protection into a geostrategic decision. Climate policy is security policy. If Europe is serious about its ambitions regarding self-defence and deterrence, it must free itself from the constraints imposed by fossil fuels.”