Iran war could spark wider economic shock, top German lawmaker warns

The energy crisis resulting from the war in Iran could quickly spiral into a wider economic shock, a top German conservative lawmaker warned on Wednesday.

Sepp Müller, the deputy leader of Chancellor Friedrich Merz's conservatives in the lower house of the German parliament, said the government is making preparations for further measures to deal with wide-ranging economic consequences.

"We are currently discussing fuel prices," said Müller, the co-chair of the coalition's task force dealing with the war in Iran.

"Nobody is talking about helium, which is a component of chips," Müller continued. "When the first chip factories worldwide start announcing that no more chips will be produced in six and a half weeks, then we will face major challenges in the third and fourth quarters, including in the automotive industry."

If the crisis drags on, it will no longer be just commuters and small and medium-sized businesses in Germany that are affected, but everyone, Müller warned.

Merz's administration earlier this week announced further steps to address spiralling energy prices, including a cut in petrol and diesel taxes and a tax-free bonus for employees.

The move comes as the Strait of Hormuz, a key waterway for the global oil and gas trade, remains largely closed due to the war in Iran, with the United States imposing a fresh blockade on Iranian ports.

Müller cautioned that the German government will not be able to protect consumers from all price hikes, but said it will try to bring about structural changes to reduce imports of fossil fuels and expand rewnewable energies.