The energy shock caused by the Middle East conflict will likely have a persistent impact on inflation even if there is a quick solution to the war, the European Central Bank’s chief economist, Philip Lane, said on Thursday.
While oil prices historically tended to revert to original levels after a burst of increases, the current episode may be different as energy costs may stay elevated with countries restocking inventory or diversifying their energy mix, he said.
“We had an overnight, fairly quick and big decline in global oil supply, which has been masked until now by inventories,” Lane said at a conference in Tokyo.
“Even if the initial energy shock starts to reverse, the second round (effects) will be with us for a while,” he said.
Meanwhile, Iranians isolated by a near 90-day internet shutdown during the war expressed joy as social media came back to life.
President Masoud Pezeshkian issued an order to reopen international internet access, state media reported on Monday.
Even in normal times, Iranian access to the outside world remains restricted via censorship of many websites.
Authorities initially imposed an internet blackout from January 8 during anti-government demonstrations that U.S.-based HRANA rights group said killed thousands.
Access was gradually restored in February, before a new blackout following the February 28 start of the war.
About a fifth of the world’s oil and liquefied natural gas (LNG) supplies normally pass through the Strait of Hormuz.
Shipping through the strait has largely come to a halt, with only a minuscule percentage of vessels transiting, compared with around 125 to 140 daily passages before the Iran war began.
“It’s international waters and Oman will behave just like everybody else or we’ll have to blow them up.
They understand that, they’ll be fine.”The White House and Oman’s embassy in Washington did not immediately respond to Reuters’ requests for comment.
The strait, the only sea exit for these fuels from key exporting countries, lies between Oman and Iran.
It is 33 km (21 miles) wide at its narrowest point, with the shipping lane just 3 km (2 miles) wide in either direction.
OPEC members Saudi Arabia, Iran, Kuwait and Iraq, as well as former member the UAE, export most of their crude via the strait.
Qatar, among the world’s biggest LNG exporters, sends most of it through the waterway.
Gold prices fell to a two-month low as new US attacks on Iran boosted the dollar and oil, stoking concerns about rising inflation and clouding the interest rate outlook.
Spot gold was down 1.7% to $4,380.62 per ounce, as of 0409 GMT, earlier falling to its lowest level since March 26, while US gold futures for June delivery fell 1.6% to $4,377.10.
The dollar rose to a one-week high, making greenback-priced bullion more expensive for holders of other currencies.
The latest strikes by the US and Iran in the Gulf dimmed hope of any imminent deal to end the three-month-old war.
The war has killed thousands and sent global energy prices sharply higher since it began on February 28 with US and Israeli strikes on Iran.
Trump has repeatedly said that a deal is close at hand.
While a fragile ceasefire announced last month appeared to hold, Trump on Wednesday dismissed reports by Iranian state TV that a deal to reopen the Strait of Hormuz was close pending talks on other issues.
Tehran sees its control of Hormuz and Washington views its blockade of Iranian ports as their chief points of leverage.
The US believes Iran wants to build a nuclear bomb. Iran has always denied this, saying its atomic programme is for peaceful purposes only.
The focus is on its enrichment of uranium, which generates fuel for nuclear power but can also make material for a warhead.
The nuclear question is extremely complicated. An agreement may eventually be possible including a lengthy moratorium on enrichment and the export or dilution of the stockpile.
