European Union officials have warned that oil and gas prices may stay high until at least the end of 2027 as tensions linked to the Iran conflict continue to affect global energy markets and economic stability.
Speaking after a meeting of eurozone finance ministers in Cyprus, Valdis Dombrovskis said rising energy costs are expected to keep inflation above earlier forecasts across Europe. According to the updated outlook, inflation in the European Union could reach 3.1 percent this year before slowing slightly to 2.4 percent in 2027.
The new figures are much higher than the earlier prediction of 1.9 percent for this year, showing how strongly the energy market is affecting the economy.
Officials explained that the problem goes beyond higher fuel prices at petrol stations or increased electricity bills. When energy prices rise sharply, businesses often transfer those extra costs to consumers. This means food prices, transport fares, manufacturing costs, and even services can become more expensive over time.
Dombrovskis warned that energy inflation could spread across many sectors of the economy if the situation continues. According to him, once higher energy costs begin affecting businesses, the impact becomes difficult to control because nearly every industry depends on electricity, fuel, or transportation.
Meanwhile, Christine Lagarde also raised concerns about the long-term economic effects of the Middle East crisis. She explained that even if fighting in the region stopped immediately, the effects on supply chains and energy pricing could continue for several years.
Europe is already familiar with the dangers of energy disruptions. The continent faced a major energy crisis following Russia’s invasion of Ukraine, which caused gas shortages and pushed electricity prices sharply higher across many countries.
After spending the last two years trying to stabilize energy supplies and reduce dependence on Russian fuel, Europe is now facing fresh pressure from instability in the Middle East.
Reports from the International Energy Agency showed that even before the Iran conflict escalated, electricity prices in Europe were already among the highest in the world. Power prices in the European Union were more than double those in the United States and about 50 percent higher than prices in China.
Experts say this growing energy challenge is now affecting more than households alone. Businesses across Europe are also struggling with high operating costs, especially industries that depend heavily on electricity.
The technology sector is among the hardest hit. Europe has reportedly been losing ground in the global competition for artificial intelligence and data centers because electricity costs are high, power grid capacity is limited, and companies often face long waiting periods before getting energy connections.
Analysts believe affordable and stable energy will remain one of the biggest economic priorities for Europe over the next few years. Without improvements in energy supply and pricing, inflation may continue to pressure businesses, governments, and consumers across the region.
