The economic director of the RWI-Leibniz Institute, Torsten Schmidt, warns of high inflation if the Iran war lasts longer than four weeks.
“High oil prices are driving up consumer prices. If the war is prolonged, inflation could temporarily rise to six percent this year,” Schmidt told the ‘Rheinische Post’. “Then economic growth would be gone and Germany would slip into the fourth year of recession.”
If the war lasts more than four weeks and Iran continues to destroy oil and gas facilities in the Gulf states, there will be real bottlenecks on the world market. “Then I also think an oil price of $150 per barrel is possible,” said Schmidt.
Economist: Prices for gasoline and diesel will initially remain high
However, if the war ends at the end of the month, inflation will not rise quite as much: “The inflation rate will rise to three percent in the summer, and we expect 2.6 percent for the year as a whole.” From Schmidt’s point of view, fuel prices will remain high: “The prices for gasoline and diesel will initially remain at a high level and at two euros per liter.”
The economist is concerned about the gas situation. A 20 percent fill level in the storage tanks is very low. “I see the risk that we won’t get the gas storage facilities full by winter – especially if the Iran war lasts longer than expected.” Given the high prices, traders have no incentive to store gas. “When it comes to gas, we are literally playing with fire,” said Schmidt, suggesting a strategic gas reserve like oil.