economy
April 6, 2026
GOODBYE TO THE GOOD LIFE Looming shortages, and this is just the beginning of a bad era
As the war in Iran threatens to stifle energy flow in the foreseeable future, Europe faces a supply shock that will likely cripple production, ground numerous planes, increase food prices, as well as borrowing costs, and bring inflation back to crisis levels.
TL;DR
- The conflict in Iran is threatening global energy security, with the Strait of Hormuz at risk of being closed.
- Europe faces a supply shock affecting crude oil, natural gas, and refined products like jet fuel and diesel.
- Potential consequences include crippled production, grounded flights, increased food prices, higher borrowing costs, and a return of inflation to crisis levels.
- European leaders are realizing that expected LNG supplies are not materializing, and the continent will feel the impact soon.
- Governments may need to implement demand destruction measures, such as limiting transportation use, to cope with shortages.
- The aviation and manufacturing sectors are particularly vulnerable, with rising input costs expected to spread through supply chains.
- The situation could lead to stagflation, a combination of stagnant growth and high prices, reminiscent of the 1970s economic crisis.
- Even if the war ends soon, it could take a year for the economy to recover.
- Europe has weeks, not months, to prepare for the economic impact of the energy crisis.