The first synchronized signs of economic damage from the Iran war are beginning to appear, and they point in a familiar but dangerous direction: weaker growth combined with stronger inflation. The March flash PMIs show that the shock is no longer confined to energy markets. The Eurozone’s composite PMI fell to a 10-month low of 50.5, Germany’s private-sector growth slowed to a three-month low, and the UK’s business growth weakened to its slowest pace since September.

At the same time, cost pressures jumped sharply, with German input-price inflation rising at the fastest pace in more than three years and UK manufacturers suffering their biggest surge in input costs since 1992. These are classic early signs of stagflationary pressure rather than a normal cyclical slowdown.

Washington’s renewed attack on the EU’s methane-import rules is really an attempt to use a wartime energy shock to reopen a broader transatlantic argument about climate regulation, trade leverage and supply security. U.S. ambassador to the EU Andrew Puzder said Europe cannot afford to be too strict on methane rules now that the Iran war has tightened LNG markets, arguing that if Europe wants affordable energy it should reduce regulatory burdens on imports.

His comments come as the EU remains heavily dependent on U.S. LNG, which now supplies nearly two-thirds of the bloc’s imported LNG, giving Washington unusual leverage in the middle of a crisis.

Europe’s latest energy shock is reviving one of the most unresolved economic problems exposed by the 2022 crisis: even when gas accounts for a minority share of electricity generation, it can still determine power prices for everyone. The Iran war has driven European gas prices sharply higher and forced EU leaders back into emergency discussions over tax cuts, state aid, grid charges and possible changes to the carbon market.

What makes this so politically dangerous is that the bloc never fully solved the transmission mechanism that allows imported fossil-fuel volatility to dominate electricity costs long after gas itself has ceased to be the main source of power.

The exchanges at CERAWeek matter because they revealed a widening gap between how governments and industry are reading the same crisis. On one side, major executives and some energy officials are increasingly treating the Iran war as a structural shock with effects that will last well beyond the fighting. On the other, the Trump administration is still presenting it primarily as a severe but manageable disruption that can be softened through stock releases, targeted logistics and diplomatic pressure.

This tension was on full display in Houston, where executives from TotalEnergies, ADNOC, Vitol and Chevron warned of long-term economic damage even as U.S. Energy Secretary Chris Wright argued oil prices had not yet reached levels that would meaningfully crush demand.

The European Union and Australia have finally closed one of the longest-running unfinished trade negotiations in the Indo-Pacific, and the timing is not accidental. After eight years of talks, the agreement was sealed as both sides look to reduce overreliance on old commercial assumptions and build more resilient economic ties in a world shaped by trade fragmentation, strategic competition and political uncertainty in both Washington and Beijing.

The deal eliminates tariffs on more than 99% of EU goods exports to Australia, while Australia says roughly 98% of the current value of its exports will enter the EU duty free. Brussels expects the agreement to save EU exporters about €1 billion a year in Australian duties and lift EU exports to Australia by about a third over a decade, while Canberra says the pact could add around A$10 billion annually to the Australian economy.

The surge into Chinese renewable stocks reflects a broader bet that the Iran war will leave a lasting energy-security scar, especially in Asia, and that China is best positioned to monetize the response. Since the war began on February 28, money has been flowing into Chinese solar, wind, battery, EV and nuclear names even as the broader Shanghai market sold off sharply.

In March, the CSI Green Electricity Index rose about 6% and the CSI New Energy Index about 2%, while the Shanghai Composite fell roughly 8%. Individual leaders moved much more: GCL Energy Technology gained about 48%, CATL about 15% and China National Nuclear Power about 8%.

At first glance, the Iran war looks like a symmetrical shock to both oil and gas. Missiles, drone strikes and the effective shutdown of Hormuz have hit both markets at once. But the deeper damage is falling much more heavily on gas, because LNG supply chains are inherently less flexible than oil.

Gas benchmarks in Europe and Asia have risen more sharply than crude since the conflict began, while Qatar has lost about 17% of its LNG export capacity after attacks on Ras Laffan and related infrastructure. That divergence is not just a price anomaly. It reflects a structural reality: oil can usually be rerouted, stored and substituted more easily than gas, while LNG depends on specialized liquefaction plants, ships, terminals and tightly timed deliveries.

The war with Iran is likely to strengthen, not weaken, the case for Asia’s energy transition, even though Donald Trump has built his political brand around fossil fuels. The reason is straightforward: this conflict is delivering exactly the kind of shock that makes oil and gas-dependent economies rethink how much risk they are willing to carry.

The disruption of flows through the Strait of Hormuz has already sent refined-fuel prices surging across Asia and Australia, with diesel in Australia rising about 36% to around A$3 a litre and gasoline in Japan up about 18% since the conflict began on February 28.