BNP Paribas economist Hélène Baudchon compares the current Oil and gas price surge linked to the war in Iran with the 2022 energy shock. She argues that weaker demand and fewer supply constraints should limit inflationary pressure and growth damage versus 2022, while central banks’ faster reaction function and close monitoring of transmission lags will be key to containing second‑round effects.

Comparing current and 2022 energy shocks

"Will the same causes produce the same effects? In other words, will the outbreak of the war in Iran and the resulting surge in oil and gas prices lead to a comparable inflationary shock to the one seen in 2022? Will their negative effects on growth be the same as those for the war in Ukraine and the subsequent energy shock?"

"Today, inflationary pressure should be less strong, as demand is less dynamic and supply is less constrained. Therefore, the conditions are seemingly not met for a significant propagation of the rise in energy prices."

"However, this will need to be closely monitored as transmission lags matter, and the return to normal will take time."

"In addition, central banks have learned from the inflationary shock of 2021–2023. They are ready to react more quickly to counter any spillovers, any second-round effects and any spiral between price increases, inflation expectations and wages."

"We have selected a set of indicators to track the impact of this new energy shock, caused by the war in the Middle East, on activity and prices in the Eurozone, the United States, oil and gas markets and emerging countries, and to see how much the current situation resembles the situation in 2022 at the outbreak of the conflict in Ukraine."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)