After US and Israeli strikes on Iran, Tehran quickly moved to shut large stretches of its coastal waters to commercial traffic. The Strait of Hormuz — the narrow corridor through which roughly one-fifth of global oil shipments pass each day — has effectively been rendered impassable, triggering an immediate spike in crude prices.
Fuel costs at German pumps rose in step with oil: premium gasoline hit about €2.50 per liter in some areas (roughly $2.89), while the national average for diesel climbed to just over €2 a liter, around €0.30 more than before the attacks. Natural gas prices also surged after Iranian drone strikes damaged LNG infrastructure in Qatar and temporarily stopped some output. Germany does not import LNG directly from Qatar and still receives much gas through Norwegian pipelines, but European wholesale prices respond to global supply and demand expectations, so disruptions anywhere push costs across the continent.
Higher energy bills hurt households and industry alike. Energy‑intensive sectors — chemicals, steel, glass and paper — are especially exposed, but carmakers and mechanical engineering firms also face steeper production costs. The confrontation in the Gulf has highlighted how exposed advanced industrial economies remain amid overlapping global shocks.
Economist Veronika Grimm, one of five advisers to the German government, has warned of a renewed bout of inflation and rising investment uncertainty, urging preparations for a longer period of heightened risk. Those warnings carry weight in Berlin: a CDU/CSU–SPD coalition led by Chancellor Friedrich Merz has been in office for about ten months. Merz campaigned on economic revival, and the tentative recovery Germany saw earlier this year could be undone by renewed instability in the Middle East.
Energy prices have been trending upward since Russia’s invasion of Ukraine; another round of increases — combined with fragile supply chains and geopolitical volatility — is damaging for Germany’s export‑dependent economy. Policymakers and business leaders are pushing for greater resilience: more diversified suppliers, larger strategic reserves, coordinated European purchasing mechanisms and faster expansion of domestic energy capacity. Many of these proposals surfaced after Russia reduced gas supplies to Europe four years ago, but implementation has proven difficult. A colder‑than‑usual winter left Germany’s gas storage levels unusually low going into the crisis.
The conflict is also complicating transport and aviation. Shipping firms are detouring around the Persian Gulf, extending voyages, adding delays and raising logistics costs. Insurance premiums for vessels operating near the area have climbed, and longer routes mean higher fuel bills. Restrictions or closures of Gulf airspace force airlines onto lengthier flight paths, increasing kerosene use and flight times.
Each day that energy costs rise raises the risk of renewed inflation as companies pass added expenses to consumers. Since the 2022 energy shock, higher input costs have already flowed into consumer prices. As household purchasing power erodes, domestic demand weakens and German exports lose competitiveness — a particular danger for a country reliant on industrial shipments abroad.
So far the federal government’s reaction has been measured. Economics and Energy Minister Katherina Reiche has set up a task force to monitor developments day‑to‑day and prepare contingency measures, tracking price spikes, supply‑chain vulnerabilities and impacts on businesses. That cautious approach has sparked criticism on social media from those demanding swifter intervention.
At the same time, high pump prices increase tax revenues: roughly half of what drivers pay at the pump goes to the state in taxes and levies, prompting complaints from motorist groups that the government is “profiting from drivers.” The administration points to earlier relief measures — such as reduced electricity taxes for companies and the removal of some levies — but critics argue the Merz government is still too reliant on fossil fuels and has not moved quickly enough to accelerate renewables. Environmental and consumer groups note that wind and solar expansion has slowed and recent legislation has hampered project rollouts.
Confronted with renewed geopolitical uncertainty, Germany looks more vulnerable than policymakers would like. The coming months will test whether Berlin can strengthen supplies and shield households and industry from another shock to energy and prices.
This article was originally written in German.