On the 9th, French Nobel Economics Prize recipient Aghion stated that if the war in the Middle East continues and leads to sustained increases in oil prices, a repeat of the 1973 oil crisis may be inevitable, bringing serious shocks to the global economy.
According to AFP, as the conflict in the Middle East drags on and the Strait of Hormuz remains blocked by Iran, countries around the world are experiencing rising oil prices.
In an interview, Aghion pointed out that if the war continues for more than a few weeks and oil prices soar above $150 per barrel, it could result in “the return of inflation and a slowdown in economic growth,” similar to the difficulties brought about by the 1973 oil crisis.
During the Fourth Middle East War in 1973, Arab countries, in retaliation against nations supporting Israel, announced an oil embargo. This move led to drastic increases in oil prices, triggered global inflation, and pushed economies into stagnation.
Despite the gloomy situation, Aghion believes it is still unlikely that a 2008-style global economic collapse will occur. However, he also emphasized that the French government “must take this seriously, coordinate with developed countries such as Europe and the United States to make corresponding responses,” and must always maintain a cautious attitude.
The 2008 global financial crisis was triggered by the bursting of the U.S. housing bubble. At the time, mortgage-backed securities experienced defaults and failed, leading to the collapse of many lenders and causing a severe credit crunch. Ultimately, this resulted in the most serious economic recession since the Great Depression of the 1930s.