Attack on Iran: Effects on the Portuguese economy already being felt with rising energy prices
The impact of the attack on Iran on the national economy is difficult to assess because "there are a number of unknowns". The biggest of these is the duration of the conflict.
Uncertainty is the word chosen by economists interviewed by ECO to anticipate the impact on the Portuguese economy of the US and Israeli attacks on Iran. Everything will depend on the duration of the conflict. But for the ‘boss of bosses’, the effects are already being felt through rising energy prices.
“The effects are already being felt and the impact on our economy will be even more negative if the conflict continues, taking into account the impact on energy costs”, the president of the Portuguese Business Confederation (CIP) told ECO. Armindo Monteiro stresses that “greater vulnerability” and “rising oil prices will translate into higher production costs”.
“It all depends on the duration of the conflict”, emphasises economist António Nogueira Leite, adding that, “in the short term”, we are “seeing a rise in crude oil prices, but [that] may not be significant if the war is short-lived”.
Pedro Braz Teixeira, director of the Research Office of the Forum for Competitiveness, highlights a “set of unknowns” in estimating the economic impact of this conflict. “Rising oil and natural gas prices; possible blockage of supplies; duration of the conflict; impact on our partners and impact on air travel and tourism”, he lists. Like António Nogueira Leite, he also sees the duration of the conflict as “one of the biggest and most important uncertainties”. “Obviously, disruptions lasting a few weeks or many months will have completely different repercussions”, he points out.
On Monday alone, oil prices on international markets rose by up to 13% following the disruption of maritime transport in the Strait of Hormuz due to Tehran’s retaliation against the attacks that killed Iran’s supreme leader, Ayatollah Ali Khamenei. Brent futures contracts, which serve as a benchmark for the European market, rose to 82.37 dollars per barrel, the highest since January 2025, but eventually eased throughout the day to 77 dollars.
On the other hand, Dutch natural gas contract prices, which are a benchmark in Europe, shot up almost 50% on Monday to €47.935 per megawatt-hour (MWh) after QatarEnergy, one of the largest exporters of liquefied natural gas (LNG), announced that it had halted production due to the attacks launched by Iran.
“The closure of the Strait of Hormuz is currently having an impact on our imports. But if it continues for a long time, it will also end up having an impact on exports”, warned the CIP leader.
António Nogueira Leite acknowledges that the increase in energy prices “has a negative effect on the national economy”, adding that he hopes “it will not be too great”. The former Secretary of State recalls that “Portugal does not depend on liquefied natural gas from the Gulf”. “Supplies are secured by Algeria, the Gulf of Guinea, the Caribbean and the US. Of course, in the short term, higher energy costs will have an impact on production costs, but there is always a time lag, [which] will be manageable unless the war takes on much greater proportions.”
The Nova SBE professor also points out that, when Russia invaded Ukraine, energy prices rose much more sharply, given European economies’ dependence on gas from Moscow. “A war that everyone expected to be quick has now been dragging on for four years”, laments Armindo Monteiro.
According to the analysis by BCP’s economic research department, “the impact is adverse, as implied by the behaviour of the financial markets”. “This impact will depend on the evolution and extent of the conflict, its relevance to the functioning of production and supply chains, the confidence of economic agents and the consequent economic policy reaction, with multiple scenarios possible that are difficult to isolate at this stage”, the economists add.
In addition to the “direct effects of rising energy prices”, Portugal is also likely to “suffer the indirect effects of the economic slowdown” of its “main partners”, although the extent of this “will depend on the aforementioned effects”, Pedro Braz Teixeira also points out.
The Government included in the State Budget for 2026 a growth forecast of 2.3% for this year and 2% in 2025, a figure that has not been confirmed. Last week, INE revealed that Portugal grew by only 1.9% last year. “Portugal has not recorded remarkable growth”, laments Nogueira Leite, stressing that this dynamic has been dragging on since the troika. “There is some investment, but it takes time to translate into production”, points out the former Secretary of State for the Treasury and Finance.
Furthermore, the year did not get off to the best start, as the series of storms that hit the country ended up devastating a large number of companies, which will be reflected in economic growth, as anticipated by the Bank of Portugal’s daily activity indicator, but also in public accounts, as the Prime Minister has already admitted. “If we have news every month, the combined effects will multiply and this will have a significant impact on our performance”, stresses Nogueira Leite.
On the other hand, the battlefront now open in Iran could also have an impact on tourism, predicts Pedro Braz Teixeira, saying “it could suffer from rising fuel prices”. “There may be some diversion of tourism from conflict zones to other regions, and Portugal could benefit from this, but to a limited extent”, he adds, on a more positive note.
“In conclusion, there are several channels that could affect us, but the level of uncertainty is still too high to estimate the impact in numerical terms”, concludes Pedro Braz Teixeira.
