During an appearance on France 5 television, Moulin remarked that the escalation of conflict near the Strait of Hormuz, along with discussions about charging fees to traverse the waterway, bodes poorly for price stability. He added that whether price levels actually shift hinges on the duration of the current crisis and the possibility of an agreement between Iran and the United States.
"We are living with very high volatility," Moulin said. "That is why we need to be prepared for all eventualities."
The Strait of Hormuz, linking the Persian Gulf to the Gulf of Oman, is a chokepoint for roughly 20% of global crude oil shipments. Any disruption - whether military clashes, blockades, or new transit tolls - can rapidly drive up global energy costs. Higher fuel prices then ripple through supply chains, pushing up the cost of goods and services.
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For the ECB, which has been fighting to bring inflation down from double-digit highs in recent years, this new source of geopolitical risk complicates the outlook. Moulin's remarks underscore that the central bank cannot yet declare victory over inflation, as external shocks remain a threat. The eurozone economy, still recovering from past energy price spikes, is especially vulnerable to any sustained increase in crude oil and natural gas costs.
In fact, the eurozone only recently emerged from a period when inflation topped 10% in late 2022, driven largely by Russia's war in Ukraine and the ensuing energy crisis. The ECB responded with a series of aggressive interest-rate hikes that slowed price growth but also dampened economic activity. Now, just as the disinflation trend appears to be taking hold, a fresh supply shock from the Middle East could force policymakers to reassess their timeline for reaching the 2% target.
While price growth has since moderated, it remains above the central bank's 2% target. Moulin's warning highlights that the disinflation process is not yet secure.
A sustained spike in energy costs from a prolonged Strait of Hormuz disruption could reignite inflationary pressures, forcing the ECB to maintain or even tighten monetary policy further. Such a scenario would weigh on economic growth in a region that is already struggling with weak industrial output and subdued consumer demand. The outcome, as Moulin noted, depends heavily on whether diplomacy between Washington and Tehran can de-escalate tensions before they translate into higher prices at the pump and across supply chains.
The ECB's monetary policy has been carefully calibrated to bring inflation down without triggering a deep recession, but external shocks like the 2022 energy crisis proved difficult to manage. If the Strait of Hormuz disruption persists, the central bank may face an uncomfortable trade-off between controlling prices and supporting a fragile economic recovery.
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