German Finance Minister Lars Klingbeil has warned against panic and scaremongering regarding the economic impacts of the ongoing war involving Iran.

In statements, Klingbeil, who also serves as vice chancellor in the current German government, urged calm amid rising concerns over energy prices, supply chain disruptions, and broader economic risks stemming from the conflict. He told the RND media group: “It is important to keep a cool head now, to see the dangers, but also not to talk them up.”

He acknowledged real risks to economic growth, including interrupted supply chains in some areas, but emphasized avoiding exaggeration or unnecessary alarm that could worsen the situation. This comes against the backdrop of a US- and Israel-led military campaign against Iran, which has driven sharp increases in global oil and gas prices.

In Germany, fuel prices (petrol and diesel) have risen above €2 per liter for the first time since 2022, reigniting debates about potential government relief measures, profiteering at gas stations, and the threat of another energy crisis reminiscent of the one triggered by Russia’s invasion of Ukraine.

Chancellor Friedrich Merz has also addressed the issue multiple times recently: Warning against an “endless war” that could lead to Iran’s state collapse, a major migration crisis in Europe, and significant long-term economic damage. Noting that current impacts on the German economy are minimal but could become far-reaching if the conflict prolongs or spreads.

Expressing hope for a swift end to limit damage to energy supplies and prices, while aligning with US positions on seeking political change in Iran. Other government figures, like Economy Minister Katherina Reiche, have set up task forces to monitor fuel prices and investigate potential market abuses, though no immediate interventions have been deemed necessary.

Early signs of German economic recovery being threatened by higher energy costs and uncertainty. Warnings from economists and ECB policymakers about potential inflation spikes and growth drags if the war drags on. Companies like tiremaker Continental already flagging risks to their forecasts due to higher costs and disruptions.

The German government’s messaging combines realism about risks especially energy dependence and inflation with calls for measured responses rather than panic, while pushing diplomatically for de-escalation. The situation remains fluid as the conflict enters its early stages with no clear end in sight.

The ongoing US- and Israel-led military conflict with Iran, which began with strikes around late February 2026, has significantly disrupted global energy markets, particularly through threats to shipping in the Strait of Hormuz (a chokepoint for roughly 20% of world oil and substantial LNG flows). This has led to sharp spikes in oil and natural gas prices, severely affecting Germany’s energy policy and exposing longstanding vulnerabilities in its energy supply strategy.

Oil and fuel prices in Germany have surged, with petrol and diesel exceeding €2 per liter for the first time since 2022. This has reignited consumer frustration and debates over profiteering by oil companies. Natural gas prices in Europe including the TTF benchmark relevant to Germany have risen dramatically—up over 50-70% in nearby contracts shortly after the conflict escalated—due to halted LNG exports from Qatar  and reduced flows through disrupted routes.

Germany’s gas storage levels entered 2026 unusually low compared to recent years, amplifying risks if the conflict prolongs and tightens global supplies further. Broader effects include potential inflation spikes potentially pushing eurozone inflation above the ECB’s 2% target and added costs for energy-intensive industries like chemicals and manufacturing.

No immediate large-scale subsidies or price caps have been implemented, with officials stating there’s currently “no need whatsoever to respond” beyond close observation. Merz has repeatedly urged a swift end to the conflict to limit damage to energy supplies and prices, warning that a prolonged war—or Iranian state collapse—could trigger far-reaching economic harm, migration pressures, and security issues in Europe.

Klingbeil has focused on preventing “Abzocke” (profiteering) at gas stations, calling for quick reviews of measures against oil companies exploiting the situation. Political pressures are mounting for relief measures reminiscent of the 2022 Ukraine crisis response: Calls from some CDU and FDP figures for a temporary “fuel price brake” (tax reductions on petrol/diesel).

Counter-proposals from Greens to lower electricity taxes instead, to incentivize shifts toward renewables and electrification. Business associations and economists warn that short-term fixes could distort markets, while pushing for structural reforms. The crisis has revived criticism of Germany’s energy choices over the past 25+ years—phasing out nuclear power, heavy initial reliance on Russian gas and slower diversification—which left it highly exposed to Middle East disruptions despite post-2022 efforts to build LNG terminals and boost renewables.

It underscores the fragility of Europe’s gas-heavy energy mix and low storage buffers, prompting EU-level discussions. Analysts argue it should accelerate—not slow—the energy transition: doubling down on renewables, efficiency, electrification, and diversified imports to reduce vulnerability to geopolitical chokepoints.

If prolonged, projections suggest meaningful GDP drags; 0.3-0.6% in 2026-2027 from higher oil prices alone, potentially €40+ billion economic hit, threatening Germany’s nascent recovery and reigniting inflation concerns. The government balances realism; acknowledging supply chain risks and growth threats with calls for calm, diplomatic de-escalation, and avoiding measures that could hinder long-term independence from fossil fuels.

While current impacts remain manageable and less severe than the 2022 Ukraine shock so far, a drawn-out conflict risks pushing Germany toward another full energy crisis, forcing urgent reevaluation of energy security, diversification, and the pace of the Energiewende. The situation evolves rapidly, with outcomes hinging on conflict duration and any further disruptions in the Gulf.