The increase in the prices of oil and gas he will not leave the European economy unscathed, who will suffer from one lower growth and a slight Increase in inflation Compared to the predictions formulated some time ago, with oil and gas prices that were expected to 60 dollars per barrel and 36 MWh respectively by the end of the year. This is what a Daily report by Goldman Sachswhich now incorporates higher energy prices due to the geopolitical risk.
The growth of the prices of June
Since the beginning of June, the growing tensions in the Middle East have done climb energy prices, on average of 15% Compared to the average of April-May, although these remain 8% below the average of the first quarter. The Brent Now he stands around 77 dollars To the barrel, about 20% more than the April-May average, but only slightly higher than the level of the first quarter, largely reflecting a greater prize for geopolitical risk. The response of natural gas prices to geopolitical tensions has been more contained for now. The TTF has risen to 39 euros/MWh, That is 10% more than the April-May average, but still well below the levels observed in the first quarter.
The implications on the growth of the Eurozone
In light of the new prospects of the energy price, Goldman Sachs has assessed the potential implications for the EURO Growth Prospectsassuming that the variations of the energy prices observed so far should Reduce by 0.1-0.2 percentage points growth of the eurozone in the next year, transforming the impulse of energy prices on European activity from slightly positive to slightly negative. The economists of the American Bank of Affairs then foresee Two other scenarioswith different implications on growth. A second scenario labeled with “Relzo prices” would see the Brent go up to 90 dollars a barile on an effect of further brake to the growth of 0.1 points percentages. A last and worst senary baptized “strongly upward” would see a conspicuous increase in the price of oil in response to possible interruptions in the Strait of Hormuz, with a expected negative impact of 0.4 points percentages on European growth.
The effect on inflation
The variations in the prices of the energy observed so far, according to Goldman’s forecasts, they should increase overall inflation on an annual basis of about 0.4 points percentages next year. In the other two price scenarios “Relzo” and “Strongly upright”energy prices are expected to add more than 0.4 and 1.8 points respectively percentages for overall inflation in the next year. As for the cross -country inflation, the business bank has for now only revised the forecasts slightly revised, while estimating that higher energy prices could add 0.1 and 0.2 percentage points to the cross -country inflation respectively in the “rise” scenarios and “strongly upward” of energy prices.
