Valdis Dombrovskis, the European Commissioner for Economy and Productivity, indicated that the upcoming spring forecast will reflect these changes, highlighting a 'stagflationary shock' as a result of the conflict.
With oil prices exceeding $100 a barrel and the closure of the vital Strait of Hormuz, the EU faces limited options for fiscal intervention compared to the responses during the COVID-19 pandemic. Dombrovskis emphasized the need for temporary and targeted support measures that do not exacerbate fossil fuel demand.
Additionally, the International Energy Agency has reported a rapid depletion of global oil inventories, raising concerns about potential shortages in Europe by the end of the month. The ongoing conflict in the Middle East could lead to further supply bottlenecks, reinforcing the EU's cautious approach to energy policy