The ongoing military conflict in the Middle East is expected to influence fuel prices in Bulgaria with a lag of approximately 7 to 14 days, potentially pushing inflation in the country up by around 0.6%, according to economist Assoc. Prof. Shteryo Nozharov, who shared his assessment on NOVA NEWS. Nozharov emphasized that this would be a moderate addition to the average annual inflation rate. Together with Mihail Krastev, executive director of the Union for Business Initiative, he examined the broader economic risks facing Bulgaria amid the crisis.

Nozharov noted that Bulgaria currently holds fuel reserves purchased at earlier, lower prices, sufficient to meet domestic demand until mid-April. He explained that changes in international markets are reflected in Bulgarian fuel prices only after about a week to two weeks. Based on the potential duration of the conflict, three price scenarios for crude oil have been outlined: a short conflict of 4-6 weeks could push oil to USD 85–97 per barrel; a medium-term crisis lasting 3-9 months may see prices rise to USD 110–130 per barrel; and a prolonged conflict exceeding nine months could stabilize prices around USD 180 per barrel.

Mihail Krastev highlighted that beyond higher costs, Bulgaria faces the risk of fuel shortages due to the strategic role of the Persian Gulf in global energy supply. He warned that such a scenario could amplify inflation beyond the levels planned in the national budget. Krastev also stressed budgetary vulnerabilities, noting that Bulgaria is currently operating under an extended budget with higher expenditures than the previous year, urging lessons to be learned from past fiscal missteps.

Assoc. Prof. Nozharov pointed out that Bulgaria has actively diversified its natural gas supply through connections with Azerbaijan, Greece, and Turkey. Currently, natural gas accounts for only about 10% of the energy consumed by the country’s businesses, while coal represents 47%, nuclear energy 30%, and renewable sources 17%, providing relative resilience to gas-related shocks.

Financial analyst Tsvetoslav Tsachev added that while markets are temporarily stabilizing due to the possibility of releasing strategic oil reserves, the underlying threat remains significant. The blockade of the Strait of Hormuz affects nearly 20% of global oil reserves and about one-third of liquefied natural gas supplies, which could trigger a global economic contraction. He noted that the United States’ strategic reserves, around 400 million barrels, are limited by a daily pumping capacity of only 4 million barrels, while daily flow through the Strait of Hormuz is between 15 and 18 million barrels, leaving national reserves inadequate to cover a complete blockade.

Tsachev further explained that in a prolonged crisis, alternative oil sources would likely be sought, with Russia as a potential option. Reports suggest the US could consider lifting sanctions on Russian oil to reduce global price pressures. He warned that if the situation persists for more than two to three months, a worldwide economic crisis and recession could follow. Additionally, the conflict is affecting roughly a third of global trade in artificial fertilizers, which is expected to push food prices higher. While Europe may be able to absorb these increased costs, poorer countries will face the most severe consequences, with limited access to essential fuels and energy supplies.