How the Iran Conflict Suddenly Pushed Germany’s Economy Toward a New Energy Crisis
Germany’s economy is facing growing pressure after the United States and Israel attacked Iran, triggering a severe energy crisis. Iran blocked ship traffic through its coastal waters, effectively shutting down the Straat van Hormuz (Strait of Hormuz), a key global oil route.
The Strait of Hormuz is one of the world’s most critical energy bottlenecks, with around 20% of global oil shipments passing through it daily. After the conflict escalated, global oil prices surged sharply. Fuel prices across Germany rose immediately, with premium gasoline in some regions reaching €2.50 per liter and diesel averaging just over €2, about €0.30 higher than before the attacks.
Natural gas markets experienced even more dramatic increases. Iran’s drone attacks on liquefied natural gas facilities in Qatar forced production to stop, triggering spikes in global gas prices. Although Germany does not directly import LNG from Qatar and receives much of its gas through pipelines from Norway, prices in Europe are determined by the broader wholesale market, which reacts quickly to global supply disruptions.
The surge in energy costs is affecting both households and businesses. Industries that require large amounts of energy—such as chemicals, steel, glass, and paper—are particularly vulnerable. However, other key sectors including the automotive and mechanical engineering industries are also experiencing rising production costs.
German economists warn that the crisis could significantly slow economic growth. Veronika Grimm, one of the government’s five official economic advisers, cautioned that the conflict may increase inflation and create uncertainty for investors. She said Germany must prepare for a prolonged period of economic instability due to ongoing global tensions.
The crisis is also putting pressure on the government of Chancellor فريدريش ميرتس. His coalition between the Christlich Demokratische Union (Christian Democratic Union), the Christlich-Soziale Union (Christian Social Union), and the Sozialdemokratische Partei Deutschlands (Social Democratic Party of Germany) had promised to revive Germany’s struggling economy. However, the modest economic improvement seen earlier this year now risks being erased by the new energy shock.
Germany had already been struggling with high energy costs since Russia cut off gas supplies following the Ukraine war. Economists say additional price increases, disrupted supply chains, and global uncertainty are worsening the situation. Energy reserves are also under pressure after a particularly cold winter left German gas storage facilities nearly empty.
The conflict is also disrupting global shipping routes. German shipping companies are now forced to avoid the Persian Gulf, causing delays in international supply chains. Insurance costs for maritime transport have risen, while partially closed airspace in the Gulf region has forced airlines to reroute flights, increasing travel times and fuel consumption.
Rising energy costs could also drive inflation higher again. Companies often pass higher production costs to consumers, increasing prices for goods and services. As living expenses rise, consumers have less purchasing power, weakening domestic demand and making German products less competitive internationally.
The German government says it is monitoring the situation closely. Economy and Energy Minister كاترينا رايشه has created a special task force to analyze market developments daily, track price increases, and assess potential risks to supply chains and businesses.