European financial markets reacted with a panic sell-off of stocks in response to the escalation of armed conflict in Iran. The Milan stock exchange index fell by nearly 4%, losing the most among the continent's key trading floors. Simultaneously, natural gas prices on the Dutch TTF exchange rose by over 20%, exceeding the level of 60 euros per megawatt-hour. Experts warn of a return of high inflation and destabilization of energy supplies to the European Union.

Crash on European stock exchanges

Indices in Milan and Madrid lost nearly 4% of their value in response to the escalation of the conflict.

Drastic rise in gas prices

The commodity became 22% more expensive, exceeding the barrier of 60 euros per MWh, a record high in two years.

Pasdaran's retaliation threats

Iran's national guard threatens attacks on economic targets in the Middle East in response to airstrikes.

Inflation risk in the EU

The ECB warns that rising energy prices may force high interest rates to be maintained for a longer period.

The escalation of hostilities in Iran caused a secondary shock on global financial markets, leading to one of the darkest days on European stock exchanges since the energy crisis. The Milan trading floor suffered the most, where the FTSE MIB index closed with a loss of 3.92%. Similar sentiment prevailed in Madrid, Paris, and Zurich. Investors frantically sold stocks, seeking safe havens, which translated into a sharp rise in the yield of Italian government BTP bonds. The spread, i.e., the difference between the interest rates on Italian and German debt, jumped to over 70 basis points, reflecting growing concerns about the financial stability of the eurozone in the face of a new conflict in the Middle East. The situation on the energy commodities market is critical. The price of natural gas in futures contracts rose by 22% in a single day, reaching the highest levels since 2022. Although February data indicated a slight decrease in costs for the poorest consumers under Arera, experts such as Davide Tabarelli warn that the current war will translate into 15% increases in gas bills and 10% increases in electricity prices. The Codacons organization estimates that the annual burden on an average Italian family could increase by up to 818 euros if high raw material prices persist in the longer term. The energy sector has been a key tool of Tehran's geopolitical game for decades, and any destabilization in the Persian Gulf region has historically led to sharp supply shocks in the oil and gas market. Economic prospects for the European Union have drastically worsened. The European Central Bank signals that the conflict in Iran threatens to reignite the spiral of inflation, which would call planned interest rate cuts into question. Another risk factor is growing pressure on trade routes. Iranian Pasdaran have threatened attacks on all economic centers in the region if airstrikes on their territory continue. Experts point out that a full blockade of the Strait of Hormuz would be a so-called "game changer," paralyzing oil supplies not only to Europe but also to China. „Esortiamo l'Ue a sospendere l'Ets in via emergenziale” (We urge the EU to suspend the ETS on an emergency basis) — Federacciai

Mentioned People

  • Davide Tabarelli — President of Nomisma Energia, commenting on forecasts for increases in gas and electricity bills.