France central bank governor warns prolonged war could trigger oil crisis

France’s central bank governor, François Villeroy de Galhau, has warned that rising tensions in the Middle East could lead to long-term economic consequences, primarily through the risk of an oil shock.

In an interview with BFM, he said that “it has not yet come to that,” but added that the longer the crisis continues, the higher the likelihood of a sharp increase in oil prices.

According to him, France is in a relatively stable position thanks to its reliance on nuclear energy, but still needs to accelerate its energy transition and reduce dependence on external factors.

Villeroy de Galhau also cautioned against excessive increases in public spending, stressing that support measures should be targeted and temporary, for example, directed at the most vulnerable sectors.

As his term nears its end, he reiterated his call to reduce the budget deficit. He emphasised the importance of keeping it at around 5% of GDP, and then gradually lowering it to 3% by 2029, which he said would help stabilise public debt.

By Jeyhun Aghazada