According to Isabel Schnabel, why does the decline in oil prices not mean the euro zone economy has returned to its pre-Iran war state?

Schnabel stated that despite falling oil prices, the euro zone is 'not back to its state before the Iran war' because core inflation remains strong, price pressures persist, the peace deal is still fragile, markets expect higher oil prices over longer horizons, gas prices are still around 40% higher than pre-war levels, crack spreads are twice their pre-war levels, and pipeline and supply chain pressures remain elevated.

What new shocks did Isabel Schnabel identify as potentially driving up food prices and adding to economic pressure in Europe?

Schnabel identified 'the heat wave in Europe and the Super El Niño' as new shocks that may put upward pressure on food prices, while also noting that 'rainwater levels are approaching critical levels.'

ECB's Schnabel Says Iran Shock Persists Despite Oil Price Drop

Jul 6, 2026

ECB board member Isabel Schnabel stated the Iran war shock persists despite lower oil prices, citing strong inflation and high energy costs. She warned climate factors like El Niño may pressure food prices, keeping rate hike options open.

reuters

2026-07-06

Peace Deal Doesn’t Restore Pre-War Situation, ECB’s Schnabel Says

2026-07-06

ECB's Schnabel Says Iran Shock Persists Despite Oil Price Drop

ECB's Schnabel Says Iran Shock Persists Despite Oil Price Drop

FAQ