Torsten Schmidt, chief economist at the RWI Leibniz Institute for Economic Research, warned that if the war with Iran lasts longer than four weeks, inflation could spike. “High oil prices are driving consumer prices up. With a longer conflict, inflation could temporarily rise to six percent this year” he told the “Rheinische Post” (Friday edition). “In that case economic growth disappears, and Germany would slide into a fourth year of recession”.
Schmidt said that a conflict extending beyond four weeks and the ongoing destruction of Iran‑controlled oil and gas facilities in Gulf states would lead to real global shortages. “I also see a price of $150 per barrel as possible under those circumstances” he explained.
If the war ends by the close of the month, inflation would still rise but not as sharply. He expects the summer inflation rate to reach about three percent, with an annual average of 2.6 percent. Gasoline and diesel prices would remain high, staying near two euros per litre for the time being.
The economist expressed particular concern over gas supplies. A 20 percent fill level in storage is very low, and he fears that the tanks may not be topped off before winter-especially if the war drags on. High prices give traders little incentive to store gas, so “we are literally playing with fire”. He suggested that establishing a strategic gas reserve, similar to the oil reserve, would be a prudent measure.