The war in the Middle East could cause inflation in the Netherlands to rise significantly, though less so than during the 2022 energy crisis. In a severe scenario, economic growth could slow down considerably. This is according to new calculations by De Nederlandsche Bank (DNB) on the impact of high energy prices on the Dutch economy.
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The war in the Middle East has led to a sharp rise in oil and gas prices. On 19 March, for example, the price of oil was well over USD 100 per barrel and the price of gas over EUR 60 per megawatt hour, representing an increase of around 45% for oil and 100% for gas since the end of February. By way of comparison, in 2022, following Russia’s invasion of Ukraine, the price of oil rose by around 30% to a peak of over USD 120 per barrel, and the price of gas shot up by more than 250% to a peak of over EUR 300 per megawatt hour. The current rise in energy prices is due to disruptions to oil and gas supplies resulting from attacks on production facilities and Iran’s blockade of shipping through the Strait of Hormuz. Furthermore, uncertainty about how the war will unfold is also causing sharp fluctuations in energy prices.
The disruption to global energy markets also has consequences for the Dutch economy. We have calculated these consequences using macroeconomic models (Delfi and NiGEM), examining the potential economic impact of rising energy prices and elevated uncertainty. We have based our analysis on three situations: a limited update of our Autumn Projections from December 2025 (the baseline), an adverse scenario and a severe scenario. The update reflects the higher energy prices as of 11 March. In both scenarios, we assume that oil and gas prices continue to increase.
In addition, we take elevated uncertainty into account in both scenarios. This is captured by a higher risk premium on equities and credit, reflecting unrest in the financial markets and the uncertainty surrounding the impact of high energy prices on businesses and the economy. The assumptions in the scenarios are consistent with the ECB’s projections for the euro area. The update and the two scenarios are not comprehensive projections, as we assume no change to monetary and fiscal policies.
In the update of our Autumn Projections, high oil and gas prices fall back to pre-war levels in the course of 2026 (see Figure 1), in line with market expectations. In the adverse scenario, oil and gas prices rise even further initially, and remain significantly higher in the second and third quarters of 2026. The assumption in this scenario is that oil and gas production and supply remain disrupted in the short term, but quickly recover as shipping through the Strait of Hormuz soon resumes. In the severe scenario, energy prices rise to very high levels and remain high for longer. This is consistent with a scenario in which the war escalates further, the energy infrastructure in the Middle East suffers even more damage, and the disruption to oil and gas transport becomes more prolonged.
Temporarily higher energy prices have a slightly negative impact on economic growth (see Figure 2). The impact on spending by businesses and households remains limited. Inflation rises by more than half a percentage point in 2026 and 2027. The higher energy prices feed through to the prices of other goods and services, albeit with a slight delay.
Given the significantly higher oil and gas prices in the adverse scenario, economic growth will be half a percentage point lower in 2026 (see Figure 2). This is partly because export growth will slow during the year due to lower growth in world trade relevant to the Netherlands. Growth in business investment and household consumption will also slow, particularly in 2027, linked to the rise in inflation of around one percentage point in 2026 and 2027.
Higher inflation has a negative impact on households’ real incomes, which inhibits spending growth. Consumer confidence also falls. High energy prices mean businesses face higher costs, with industrial firms that rely on oil and gas being particularly hard hit. In this scenario, higher energy costs, combined with a higher risk premium on credit and uncertainty regarding demand for products and services, make companies reluctant to invest.
The persistent and very high energy prices in the severe scenario result in greater economic damage. Growth slows by around 0.8 percentage points in 2026 and 2027. Inflation rises by 1.6 percentage points in 2026 and by 2.8 percentage points in 2027 (see Figure 2).
Growth in private consumption falls by more than 2 percentage points in 2027, due to the negative impact of higher inflation on households’ real incomes. Wage growth also rises in this scenario in 2027, although less than inflation. Unemployment also rises and consumer confidence takes a hit.
As domestic and foreign demand for goods and services declines, growth in business investment and exports also slows. Export growth slows in line with a decline in world trade growth. Growth in business investment declines by more than 5 percentage points in 2027. In addition to the impact of falling demand, higher credit risk premiums and rising operating costs also dampen investment growth.
In the severe scenario, inflation rises sharply because energy prices remain high for longer and feed through into the prices of other goods and services. The 2022 energy crisis has shown that such pass-through effects can be stronger than previously thought, as seen, for example, in the pass-through of high energy prices on food prices. Facing higher inflation, employees will try to offset their loss of purchasing power by demanding higher wages. This also gives rise to second-round effects, which make high inflation more persistent.
We have also calculated how the various scenarios would affect the disposable income of different household groups. Using a microsimulation model, we have estimated the effects of higher prices for energy (electricity and gas) and fuels (heating oil, petrol and diesel). We keep incomes fixed at their 2025 levels and allow only energy cost increases to pass through. The impact on disposable income is therefore entirely due to rising expenditures.
The microsimulation model uses recent income data linked to consumption data from 2015 and does not take behavioural changes into account. The results therefore represent an upper limit. In reality, the impact will be less substantial. For example, energy consumption (particularly gas) has fallen sharply and households tend to save energy more following price shocks in recent years. However, we do make assumptions regarding the dampening effect of various energy contracts. We base this on a recent study, which shows that the new Statistics Netherlands measurement method results in estimated energy costs that are approximately 45% lower. This is because almost all households have a fixed-rate (54%) or variable-rate (39%) energy contract (ACM); in the case of variable-rate contracts, rates are adjusted only a few times a year. Only 7% have a dynamic contract, which involves daily rate adjustments, meaning price increases are immediately reflected on the energy bill.
This calculation shows that the negative impact of high energy prices on disposable incomes is less severe than it was during the 2022 energy crisis. In the update of the Autumn Projections, the negative impact amounts to 1% for the average household, which is about 80% lower than the impact in 2022. In the severe scenario, the negative impact is 6%, which is still about 20% lower than the impact seen after the 2022 price shock. Lower-income households are hit harder by rising energy prices, as they spend a larger proportion of their income on fixed costs such as energy. The impact of higher fuel prices is more evenly distributed across income groups.
We also use Statistics Netherlands microdata to estimate the impact on the energy ratio, which is the proportion of household income spent on energy bills. This enables us to take into account income effects and recent consumption data, and we make the same assumptions regarding the mitigating effect of various contract types. We do not take behavioural changes into account in this calculation either.
The average energy share amounts to just under 4% in the update and to just under 5% in the severe scenario, again with a greater impact on lower income groups. In all scenarios, the average share remains below the 2022 level (see Figure 3).
The calculations show that the economic impact on the Netherlands depends heavily on the duration of the war and on the damage to production infrastructure in the Middle East and oil and gas exports. If energy prices rise temporarily, the impact on growth and inflation may be limited. Very high energy prices over a prolonged period will ultimately be reflected in the prices of other goods. This also has an impact on wages, albeit with a delay. Such second-round effects increase the risk of more persistent high inflation. In practice, monetary policy will respond to ensure price stability, which could result in inflation being lower than estimated in the scenarios.
26 March 2026
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