Rising tensions in the Middle East are fuelling growing unease across financial markets. Increasing energy prices are stoking inflation fears and putting upward pressure on interest rates. According to Huisman, Professor of Sustainable Energy Finance at Erasmus School of Economics, recent movements in capital markets clearly reflect investor doubt about the economic outlook.
‘Those figures show that investors are becoming less willing to commit money for the long term. The energy crisis is creating uncertainty,’ Huisman says. That uncertainty is being driven by rising oil and gas prices, partly due to disruptions in key supply routes such as the Strait of Hormuz. While Europe is less directly dependent on the Middle East than during previous crises, Huisman stresses that the impact could still be significant. ‘The market price is a global price. If it rises in Asia, it rises here as well.’
‘A serious problem’
Huisman describes the current situation as genuinely concerning. ‘We do not yet know exactly how to interpret this, but it is clear that it is a serious problem.’ According to him, energy prices are moving erratically, with peaks and troughs closely tied to geopolitical developments. This makes it difficult for markets to form stable expectations. An additional risk lies in the Netherlands’ low gas reserves. With storage levels at a historic low, vulnerability has increased. Huisman points out that shortages will need to be made up later: ‘All the reserves that cannot be filled now will have to be filled later. That means a significant amount of demand will need to be caught up.’ He also warns that repairing damaged energy infrastructure will take time. Even if other countries increase production, supply will not recover immediately. This raises the prospect of a prolonged impact on energy prices and inflation.
Impact on the property market
According to Huisman, this uncertainty is also feeding through to the real estate sector. Investors are becoming more cautious and may postpone major commitments. ‘If economic growth slows, investors will delay investments. I can well imagine that they will wait and see in the coming period before making large real estate investments.’
No repeat of 2022, but risks remain
At the same time, Huisman highlights key differences from the previous energy crisis. Europe is less dependent on a single supplier and the starting point for interest rates is different. This reduces the likelihood of a sudden and extreme rate spike. Nevertheless, his core message remains clear: uncertainty has returned, and that alone is enough to move markets. ‘The energy crisis is creating uncertainty and we are seeing that directly reflected in investor behaviour.’ A new rate shock therefore cannot be ruled out, but will largely depend on how long geopolitical tensions and elevated energy prices persist. One thing, according to Huisman, is certain: markets are once again on edge.
- More information
Download the full interview (in Dutch) with Ronald Huisman on Vastgoedmarkt.nl above. For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, +31 6 53 641 846.
