Dutch households face sharp spike in living costs if Middle East conflict escalates

Dutch households could face steep costs as a result of the war in the Middle East, economists at Rabobank warn after running several impact scenarios for the national economy. In the most severe scenario, petrol could reach about three euros per liter, and monthly energy bills for a new contract could temporarily exceed 400 euros.

RaboResearch specialists say such a scenario is possible if vital energy facilities in Qatar and Saudi Arabia are damaged. Oil prices could soar above 150 dollars per barrel, and gas could hit 125 euros per megawatt-hour. Inflation would climb past 4 percent, economic growth would fall by 0.6 points, and a full recovery might not start until 2028.

Rabobank has also considered more moderate outcomes. Economists suggest that petrol could stay near 2.25 euros per liter for some time, and new energy contracts might hover between 240 and 250 euros per month in the spring. The final impact will largely depend on how severely the war disrupts global energy markets.

Allianz Trade, a credit insurance provider, echoes this assessment with updated projections for the eurozone. Its baseline scenario envisions a brief conflict, which would push inflation up only slightly, since oil prices and other costs would drop again fairly quickly after an initial surge.

Johan Geeroms, Allianz Trade’s risk director for the Benelux, warns that a conflict in Iran lasting more than a few weeks could cause an inflation spike like the one seen in 2022. “The blockage in the Strait of Hormuz is already putting pressure on the real economy,” he says. “Complete supply chains are stalling. Containers are stranded, detours add weeks to shipping times, and freight costs climb sharply.”

Rabobank economists argue that even in the worst-case scenario, energy price increases would likely be much less severe than in 2022, when Russia’s invasion of Ukraine caused gas prices to spike dramatically. “We do not anticipate the current conflict leading to extreme energy volatility,” they note, “partly because global interests are high, and nations such as China are urging Iran not to completely block the Strait of Hormuz.”