Commerzbank said rising tensions in the Middle East raise the risk of an oil supply shock, which can pressure EUR/USD. It pointed to the US role as a reserve currency, the US being a net oil exporter, and the euro area being a net oil importer. It said a sharp and prolonged rise in oil prices would affect the global economy. Higher oil prices can improve US terms of trade, which can lift the real effective US dollar exchange rate.

Us Resilience Versus Euro Area Vulnerability

Commerzbank said markets may expect the US economy to cope better with an oil shock than the euro area. It added that the Federal Reserve could respond to oil-driven inflation with larger rate rises than the ECB, which may face weaker growth. It said there is a risk the US and its allies could be drawn into a longer war. It noted that an extended blockage of the Strait of Hormuz could cause a sustained oil price shock, similar to after Russia’s invasion of Ukraine in February 2022. It cited Brent crude rising from around USD 100 per barrel to nearly USD 140 at that time. It also cited EUR/USD falling from around 1.13 in February to as low as 0.95 in September, before oil prices started to fall from mid-year. Given the escalating conflict in the Middle East, the risk of an oil supply shock is growing, which supports a stronger Dollar against the Euro. Brent crude has already surged past $115 a barrel in the last two weeks, creating a clear negative outlook for the EUR/USD pair. The market is increasingly pricing in the risk of a sustained disruption to global energy supplies.

Trading Implications For Eur Usd

Since the United States is a net oil exporter, rising oil prices improve its terms of trade and strengthen the real effective value of the Dollar. In contrast, the Euro area is a net importer of energy, meaning higher oil costs weaken its economy and its currency. Late 2025 data from Eurostat confirmed the region’s energy import dependency remains above 60%, highlighting this vulnerability. An oil price shock is a burden for any economy, but we believe the US economy will prove more resilient than the Euro area’s. This view is supported by recent data showing robust US GDP growth in the final quarter of 2025, which contrasts sharply with February’s slowing manufacturing PMIs across the Eurozone. This divergence suggests the US can better absorb the economic impact. This dynamic implies the US Federal Reserve could respond to oil-driven inflation with more aggressive interest rate hikes than the European Central Bank. The ECB would have to be more cautious, balancing inflation against a weakening economy. Recent commentary from Fed officials has maintained a hawkish tone, while ECB members have expressed growing concern over the industrial slowdown. We only need to look back to the period after Russia’s invasion of Ukraine in February 2022 for a clear precedent. At that time, Brent crude prices climbed from around $100 to nearly $140 per barrel. In the following months, the EUR/USD exchange rate fell from approximately 1.13 to a low of 0.95 by September of that year. A sustained conflict could block major shipping lanes for an extended period, leading to a prolonged oil price shock. In this environment, traders should consider positioning for a weaker EUR/USD. Buying put options on the Euro or establishing bear put spreads could be effective strategies to capitalize on the potential downside in the coming weeks. Create your live VT Markets account and start trading now.

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