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ECB sees inflation above 3% in 2026 as shipping disruption lifts oil
Brent crude has slid from about $118 to roughly $94 per barrel since late April, but analysts still see oil staying “higher for longer” amid Strait of Hormuz shipping disruption.
In remarks covered by Action Forex, ECB Governing Council member Isabel Schnabel said euro area markets have been pulled in two directions since the ECB’s prior policy meeting on April 29 to 30, 2026, with Middle East shipping disruption and a separate global AI boom both shaping expectations. Schnabel said the unresolved conflict in the Middle East has reinforced “higher for longer” expectations for oil prices, even as near term oil prices have fallen from their April peak. She noted that inflation fixings have eased from April highs but remain above 3% for 2026 and above 2% for 2027, and that ECB rate expectations have moderated somewhat. While markets have priced in around three ECB interest rate hikes overall, Schnabel said the median response in the ECB Survey of Monetary Analysts points to only two hikes. She added that, despite the war weighing on euro area and global growth expectations, investors’ risk appetite has stayed strong, with euro area equity markets recovering close to pre war levels and corporate and sovereign bond spreads remaining narrow. On energy and downstream inflation pressures, the ECB said Brent crude fell from $118 to about $94 per barrel and has hovered near that level since late May. Schnabel also pointed to higher gas prices trading at around 50% above pre war levels, and to refined product increases, saying petrol, diesel and jet fuel prices have risen about 40% to 45% since the start of the war, alongside sharp gains in fertilizer related products and plastics that suggest energy costs are feeding broader inflation through downstream costs.
Latest closeWTI crude $81.23 ▼1.7%|Brent $85.92 ▼2.8%