Energy Price Surge Fuels Inflation Pressure in Europe

Rising oil and gas prices are fueling inflation pressure in Europe as tensions in the Middle East heighten risks to energy supplies.

The European Central Bank's policy outlook is complicated by this renewed inflation pressure, which also poses fresh challenges to the region's economic recovery.

International oil prices climbed to six-week highs on Thursday amid escalating tensions in the Middle East and concerns over possible disruptions to energy shipments through the Strait of Hormuz. Brent crude briefly rose above $97 a barrel before giving up some gains, while West Texas Intermediate (WTI) crude climbed to nearly $93 a barrel.

The impact of higher energy costs is already visible in Europe's latest inflation data, with annual inflation in the eurozone expected to rise to 3.3 percent in August from 2.9 percent in July, according to preliminary figures released by Eurostat on Tuesday.