Iran war drags European economy down, pushes prices up

Brent crude has jumped from a pre-conflict average of $64 per barrel to a projected $83 average for 2026. That 30% spike, triggered by the Iran war that erupted on February 28, is now doing exactly what energy shocks have always done to import-dependent economies: squeezing them from both ends.

The energy chokepoint that matters most

The Strait of Hormuz handles roughly 20% of the world’s oil and liquefied natural gas trade. When a war breaks out in the country that borders it, shipping routes don’t function normally. That’s the situation Europe is dealing with right now.

European TTF natural gas prices have surged to nearly €44 per MWh. For industrial users across the continent, that translates to a 20-30% annual increase in energy costs.

The conflict began with US and Israeli airstrikes that resulted in the assassination of Iranian Supreme Leader Ali Khamenei.

The numbers paint a grim picture

The eurozone’s Purchasing Managers’ Index dropped to 48.6 in April 2026. Anything below 50 signals contraction. The input price index, which measures what businesses pay for raw materials and energy, surged to 76.9. That’s the highest reading since late 2022, when Europe was still reeling from the initial fallout of the Russia-Ukraine conflict.

Germany and Italy, the eurozone’s first and third largest economies, are now at risk of slipping into a technical recession if energy pressures persist.

The European Central Bank had been planning interest rate cuts to stimulate growth. On March 19, it postponed those plans and revised its inflation forecasts upward.

UK inflation is expected to exceed 5% for the year.

What this means for crypto investors

Bitcoin’s recent rallies have stalled amid the heightened geopolitical anxiety. Crypto trading platforms are seeing increased activity in blockchain-based oil and gold futures. Stablecoin usage is also seeing a resurgence as traders prioritize capital preservation.

The energy price shock also raises costs for proof-of-work mining operations in Europe, though that’s a smaller concern given the industry’s geographic diversification in recent years.

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