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4w ago

EU Officials Forecast High Oil and Gas Prices Through 2027

Prolonged supply strains from the Iran war are expected to raise inflation and slow eurozone growth, forcing closer ECB monitoring of policy risks.

European Central Bank President Christine Lagarde, left, and President of the Eurogroup Kyriakos Pierrakakis talk to the media during the Eurogroup finance ministers meeting in capital Nicosia, Cyprus, Friday, May 22, 2026. (AP Photo/Petros Karadjias)
From left to right, European Commissioner for Economy and Productivity, Implementation and Simplification Valdis Dombrovskis, European Central Bank President Christine Lagarde, President of the Eurogroup Kyriakos Pierrakakis, Managing Director and the European Stability Mechanism Pierre Gramegna talk to the media during the Eurogroup finance ministers meeting in capital Nicosia, Cyprus, Friday, May 22, 2026. (AP Photo/Petros Karadjias)
European Central Bank President Christine Lagarde, second left, and President of the Eurogroup Kyriakos Pierrakakis, left, gather with European Finance ministers and Governors for a family photo during the Informal meeting of the economic and financial affairs council, in capital Nicosia, Cyprus, Friday, May 22, 2026. (AP Photo/Petros Karadjias)
European Central Bank President Christine Lagarde arrives at the conference center for the Eurogroup finance ministers meeting in capital Nicosia, Cyprus, Friday, May 22, 2026. (AP Photo/Petros Karadjias)

Overview

  • Senior EU officials say oil and gas prices will remain above pre-war levels through at least the end of 2027, keeping energy costs elevated across the bloc.
  • The EU now expects energy-driven headline inflation near 3.1% this year and about 2.4% in 2027, figures that are materially higher than earlier forecasts.
  • The European Central Bank warned that 'lagging effects' from the energy shock will keep goods prices high and said it will follow a meeting-by-meeting, data-dependent approach to policy.
  • Eurozone growth projections have been cut to roughly 0.9% this year and 1.2% in 2027, a downgrade officials say reflects higher energy bills but does not point to recession.
  • Analysts and officials warn sustained high energy costs will widen Europe’s competitiveness gap for power‑intensive industries and raise household and business bills while strategic reserve releases try to ease markets.