The President of the European Central Bank (ECB), Christine Lagarde, warned on Monday that the closure of the Strait of Hormuz could have inflationary consequences due to a potential supply shock affecting the economy beyond the energy sector.
“It could create a situation where a significant portion of the oil and gas transiting through the Strait of Hormuz might be affected. If so, it will impact oil and gas prices,” Lagarde stated during remarks at the European Parliament.
The ECB president cautioned about the secondary effects that this situation could trigger, noting that its impact would extend beyond the energy market:
“Although it’s a supply shock, it could be so extensive in depth and duration that it may generate far-reaching secondary effects beyond just energy market prices,” Lagarde added.
Lagarde expressed satisfaction with the current economic stance but warned: “Undoubtedly, in the short term, if this risk materializes, there will be inflationary consequences.”
Also on Monday, the European Union’s High Representative for Foreign Affairs, Kaja Kallas, warned that the Iranian threat to close the Strait of Hormuz is extremely dangerous.
In response to Saturday’s U.S. attack, the Iranian Parliament demanded the closure of the Strait of Hormuz, through which 20% of the world’s seaborne crude oil passes, although the final decision rests with Iran’s Supreme National Security Council.
Upon arriving at the Foreign Affairs Council in Brussels, Kallas stated that ministers will discuss the situation in Iran following the U.S. attack, focusing on diplomatic solutions while assessing the consequences of the escalating conflict.
“The Iranian Parliament demanded the closure of the Strait of Hormuz, which would be extremely dangerous and beneficial to no one,” she stated.
Kallas also mentioned that the European Union has always favored diplomacy, recalling that the EU engaged with the Iranian government on Friday.
During this conversation, Kallas stated that Iran indicated its willingness to discuss the nuclear issue and broader security concerns affecting Europe. “We must continue because ultimately, only a diplomatic solution can provide a long-term perspective,” she added.
The EU’s chief diplomat also recalled that the international agreement on Iran’s nuclear program includes a snapback mechanism allowing automatic international sanctions on Iran if Tehran breaches the deal’s terms.
“If everyone agrees that Iran should not have a nuclear weapon, we need to work towards that,” she stated.
Spanish Foreign Minister José Manuel Albares also urged the European Union to bravely “raise the flag of peace,” defending international law, diplomacy, and negotiation.
French Foreign Minister Jean-Noel Barrot emphasized Europe’s crucial role in negotiating a “durable, solid, and verifiable” reversal of Iran’s nuclear program over years and decades.
Barrot stated that the goal “is not just” to temporarily delay Iran’s access to nuclear weapons, advocating for negotiations to ensure that Iran never acquires nuclear arms.
The French diplomatic head stressed that France rejects any attempt to forcefully change Iran’s regime, stating it would be illusory and dangerous to believe such change could be achieved “by bombs.”
Lithuanian Foreign Minister Kestutis Budrys declared that the European Union should organize itself to press Iran “toward a path of peace” to prevent further conflict escalation.
“Now is the time for Iran to choose whether it wants to be a good member of the international community or continue with destructive policies in the region and globally. Iran’s possession of nuclear weapons is an existential threat to Israel and a grave threat to the entire international community,” Budrys stated.
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