Crash on European Stock Exchanges and Sharp Rise in Gas Prices After Attack on Iran

The situation on financial markets has drastically deteriorated in the face of military escalation in the Middle East. European indices ended Tuesday's session with deep declines, with the Milan stock exchange losing 3.92%, becoming – alongside Madrid – the worst-performing trading floor in the European Union. The scale of the sell-off is staggering: it is estimated that in just two days, the market capitalization of European companies decreased by over 870 billion euros. The spread between Italian and German bonds is also rising sharply, indicating a flight of capital to safe havens. The European Central Bank warns that the conflict could undermine previous progress in the fight against high prices, forcing the institution to maintain high interest rates for a longer period. The greatest concerns are in the energy sector, where the price of natural gas in futures contracts exceeded 54 euros per megawatt-hour, representing a 22% increase in one day. Some quotes even indicated surpassing the 60 euro barrier, which is the highest level since the peak of the energy crisis in 2022. Representatives of the heavy industry, including the Italian Federacciai, are appealing to the European Commission for an extraordinary suspension of the ETS system to prevent a wave of bankruptcies in the steel sector. At the same time, experts point to the strategic threat related to a potential blockade of the Strait of Hormuz, which could completely cut off oil and gas supplies from the region, even impacting China's economy. The Strait of Hormuz is the world's most important oil chokepoint; in 2018, an average of 21 million barrels of oil flowed through it daily, accounting for about 21% of global consumption of liquid petroleum products.Although data from February 2026 indicated some price stabilization for vulnerable consumers, the current supply shock is likely to translate into drastic bill increases in the coming months. Consumer organizations estimate that the impact of the war on household budgets could range from 614 to even 818 euros per year. Although the European Union has reduced its dependence on raw materials from Russia, still 10% of gas imports come from this direction, which, coupled with the cutting off of Middle Eastern sources, puts Europe in a difficult position. Investors are also anxiously watching Wall Street, which also opened in the red, reacting to the global increase in uncertainty. „Per la guerra bollette gas +15%, elettricità +10%” (Due to the war, gas bills up 15%, electricity up 10%) — Davide Tabarelli In the face of the crisis, interest in Italian retail bonds BTp Valore has increased, with sales exceeding 10 billion euros in two days, suggesting that individual investors are seeking steady income in uncertain times. Nevertheless, the overall economic picture remains grim. Core inflation, measured by the shopping basket, was 2.2% in February 2026, but analysts expect a sharp rebound in March. This situation calls into question the predicted economic recovery in the eurozone, as high energy prices directly translate into a decline in the competitiveness of European industry and a drain on citizens' wallets.