Europe could face an economic crisis if the war in the Middle East drags on longer than the month President Trump has suggested, writes Bloomberg.
According to experts, the European Union remains the most vulnerable among major economies to the fallout from a war with Iran, given its dependence on Middle Eastern oil and gas supplies. This year, the EU had been counting on moderate economic growth and inflation staying within manageable bounds.
“If the conflict is short-lived and energy prices rise only briefly, the damage will be limited. However, a prolonged war that keeps oil and gas prices elevated could force governments to spend more to shield voters from rising costs and put pressure on incumbent leaders,” analysts say.
Some analysts believe Trump will seek to prevent a sustained rise in energy prices, as such a scenario could also hurt him politically ahead of the US elections.
Iran, too, has strong reasons to avoid excessive escalation in the Strait of Hormuz. China—its key ally alongside Russia—relies heavily on this route for its oil imports.