El EUU and Israel attack on Iran February 28 and its impact on the Prime Minister and the price of energy allayed fears that we were on the doorstep of a new energy crisis, 4 years after living through invasion of Ukraine from Russia on February 24, 2022.
Likewise, for the oldest parts of the country, Iran will always remember the second oil crisis it derailed The Islamic Revolution of 1979also in February, and this had far more devastating effects on Western economies than the first crisis associated with the Yom Kippur War between Egypt and Israel.
The first consequences of the recent attack and the subsequent response to Iran and its pleasantness block of Ormuz streetbecause 20% of the oil that is consumed in the world flows and the same percentage as the Minister of Natural Gas (LNG), we noted.
While it has been said that there are countries directly dependent on this administration that are affected (China, India, Japan and other Asian countries), it is certain that the impact on energy prices can be a serious problem for all importing countrieswhich will do what economists call a “negative supply shock” (less growth and more inflation).
PUSH European UnionHowever, it will be negatively impacted, and there are few analysts who cite this potential impact as one of the motivations that motivated Trump to launch this Israeli-ordered operation and its unfathomable consequences.
Magnitude and duration of the shock. –
Try to calculate it economic impact This conflict is a pointless exercise because we do not have information about two key variables that will determine the impact: (i) the magnitude of the conflict and (ii) its duration.
We only have some information about what happened in the first week of the conflict in certain variable markets.
i’m the same expectations, estimates, simulations and clarifications which are very difficult to implement in case of geopolitical crises. Because, as many say, these conflicts are known to be fulfilled, but no one knows how to end them.
All we can do, and it is not little, is to note the magnitude and duration of the shock from Ukraine and try to evaluate whether the actual situation resembles it or not. In Graph 1, I present the development of the Brent barrel price, the benchmark for Europe, since 5 years ago.
Graph 1. The price of Brent oil for the last 5 years
Immediately highlight the last few days, from $72.45/barrel on February 27th, just before the start, at 93.04 Cierre del Viernes28.4% in one week. But the price levels are much lower than the low prices at the height of the Ukraine invasion crisis, $128 on March 8, 2022.
Between swings around $100-110, I’ll be targeting $120 a barrel in June 2022. In terms of size, we still saw many times the highest values achieved in the first months of the invasion of Ukraine.
To these price fluctuations in dollars must be added development of the euro-dollar exchange rate type. If the euro weakens against the dollar, as is happening in this crisis, a barrel of oil will become more expensive in euros.
However, we are once again starting a week of a sufficiently strong euro ahead of the US currency, which is something the Trump administration has always sought to reduce the trade deficit.
To complete the size assessment in an appropriate way, we should measure the barrel in “real” values, it is decided, if we do not count the development of global inflation in recent years.
For example, the real value of €100 in February 2026 is equivalent to €87 in 2022, in the case of the Spanish CPI, cumulative inflation over the last 4 years has been around 15%.
As for duration, a barrel of Brent It lasts 9 months to $90 a barrel and 14 months to $80. Uncertainty about duration is therefore the greatest unknown at this point in time regarding the potential economic impact of this conflict.
As for natural gas, in graph 2 I present the development of the European Dutch TTF reference on average in euros per kilowatt hour. Therefore, the development of the type of transmission does not concern you.
Chart 2. TTF natural gas price for the last 5 years
Differences with oil barrel calls are enough. What is certain is that over the last week the price of gas lost 65.7%, from 32.22 to €53.39/Mwh. However, the levels are much lower than the €250 that was raised in the second half of August 2022 (it reached exactly €339 on August 26 this year).
I have this comparison unadjusted for general CPI inflation accumulated over those years. For all that, in what we are talking about, we are very few levels raised by the Ukrainian energy crisis.
In terms of duration, MWh is up to 70 EUR for more than 12 months, from December 2021 (before the invasion, by the court of the minister of gas used in Ukraine) to December 2022.
And up to €50 are “worrying” real values from August 2021 to February 2023, currently 18 months. We have been talking about one for a long time gas crisis of large scale and duration.
Someone with sense will say that we are comparing a past crisis, the extent and duration of which we know, with another that affects us. Criticism that is valid.
Therefore, I must continue to compare the development of some market indicators in the first week of this crisis with a daily frequency, which are the only data we have, with those of the first week between the crisis in Ukraine. This is what I see in Table 1 below.
Table 1. Comparison of market indicators in week 1: Iran versus Ukraine
I list them in the first 2 columns indicators of the current crisis in Irancomparing daily data of variables in anticipation of the crisis (2/27/2026) with data from a later week (daily market window 6/3/2026). In the third column, the change fee is the same as for the first week.
In the last 3 columns, I repeat the exercises for Ukrainian crisisI return as “hopeful” to the crisis the day before the invasion (2/23/2022), although we commented that some variables, such as the price of natural gas, began to suffer even months before this date.
From Table 1 we get some interesting conclusions, especially regarding the differences in levels that I commented on earlier. It’s the first one impact on the price of oil In the first week of this crisis, it was more intense than in Ukraine, which was also noticed in the translation of the prices that the drivers suffered.
No embargo, e impact on the price of gas he was much better in the russian invasion. In both cases, the euro weakened, but the impact was greater in week 1 in Ukraine than this week in Iran.
It is clear that the dollar did not act as much of a “safe haven” as gold did, including the price that fell in this first week in Iran, compared to a sudden drop of 4.5% in the first week in Ukraine.
Although surprising, the geopolitical risk of the current crisis therefore appears to be lower now than a Russian invasion of Ukraine.
With regard to bags, both saw negatively affected in the first week of the crisis. And European stock markets saw more effects than American ones, consistent with the potential economic impact in one area or another.
Interestingly, however, once in a while, the negative impact on the North American stock market in Week 1 of Iran was much greater than that suffered by the invasion of Ukraine, while the impact on European stock markets was less. One possible interpretation is that variable rent is not a real crisis as a strictly “European” one, but a global one.
Impact on IPC. –
As with the rest of macroeconomic quantities, el impact on IPC It will depend on the final size of the impact on energy costs and its duration, and the larger it is, the more likely it will be reflected in the costs of the economy through “second round” effects (transport, food, manufactured goods and finally services).
But we can make a calculation of what the impact on the energy component will be in order to maintain the final prices of the energy component of consumption as they are this week.
From ICAE (Instituto Complutense de Análisis Economico) we have the first estimate of the impact on inflation 3 main energy products (gas, gas and electricity) which together have a weight of 7.5% in the general CPI.
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Benzine: the price has fallen by 17.4% since the day before launch. If we assume that if March continues like this, the monthly price will fall +16.8% from the February average, which will tend to contribute to the CPI of 3.6 decimas.
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Benzine: its price increased by +9.2% this week. Continuing through the end of the month, we expect the monthly price to pass +9.5% with a contribution of 1.9 decimas to the CPI.
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Electricity: the regulated price (PVPC) increased by 19.9% weekly, which means a sudden 5.2% of the monthly price of electricity, with a contribution of 1.7 decimas to the CPI.
Therefore, the three components in their conjunto ternírian, until the moment, impact on the lift 7.2 decimas of the general CPIand none above the below.
Influence on monetary policy. –
In some ways you are talking about one “subida de las mortgages” as a result of inflationary criticism. I think you have to show a certain amount of respect, although this scenario cannot be ignored.
In our case, the European Central Bank (ECB) will hope to see both the size and duration of the shock and its transmission to the economy through second-round effects.
This is a “negative supply shock” that is reflected in this more inflation but less growthcaution is even better.
Another case would be that the american economyan energy exporting country and which will therefore suffer a “positive choque de demand”, it is said, more inflation and more growth, justifying a more immediate decision on the types of interests, which will provoke a new conflict between Trump and the Federal Reserve Bank.
In what you refer to ECBWhat was your policy during the Ukrainian crisis for 4 years? In graph 3, I see the daily development of one of the types of official interest, the ease of deposit, from the end of 2021 to 2025.
Chart 3. Type of ECB interest (deposit facility) 2022–2025
Since the ECB was sufficiently “active” during the Ukrainian crisis and increased the types of interests as never before in its 26-year history, it took quite a while to make its first step to growth (+0.50 p.). I didn’t bring him until July 27, 2022, as it turned out, five months after the invasion of Ukraine.
On the contrary, Federal Reserve The first movement was ready by March 17, 2022, less than a month after the invasion. And they suffered faster and in greater numbers than the ECB.
When the Eurozone bank suffered the first 50 bps, the Federal Reserve had it at +200 bps, with 4 moves of 25, 50, 75 and 50, respectively, from March to July.
“social” escudo.-
In the next article, I will give my opinion on the experience of “social shield” placed in March by Central Govt and CC.AA. during the Ukrainian crisis. I would like to point out that I do not consider the subsidy of gasoline and gas oil for final consumers to be “social”.
This is because social shield measures must be effective and progressive. Subvención was neither. And you have huge upfront costs. I hope we have learned from the mistakes of the past.
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