MOSCOW, September 21. /TASS/. Western nations have entered an acute phase of an energy crisis, with the worst economic deterioration still ahead, Vasily Koltashov, economist and Director of the Institute of the New Society, wrote in an op-ed for TASS. The automotive, petrochemical, metallurgy, and fertilizer industries could be the first to face severe difficulties, he noted.
"The main deterioration in indicators is yet to come, as is a prolonged 'energy crisis.' Emerging from it will be a difficult and lengthy process for the West, as evidenced by the experience of 1973-1985," Koltashov noted.
According to the expert, attempts to curb oil prices by raising interest rates can only limit price growth at the expense of shrinking Western economies and their manufacturing sectors.
He cited data showing that in September, the US Federal Reserve raised its benchmark rate to the 3.75-4% range for the first time in three years, while the European Central Bank raised its rate to 2.65% and the Bank of Japan to 1.25%. The Bank of England maintained its rate at 3.75%.
"Raising rates and tightening monetary policy was a response to the threat of oil prices settling around $110 per barrel. Rates will likely be raised further before the end of 2026," the expert observed.
In his assessment, such a policy will not resolve physical shortages of energy resources but could instead exacerbate the industrial downturn and worsen the situation for small and medium-sized businesses.
Serious consequences
The expert recalled that the first half of the 1980s was a period of depression for the West. "All this should be taken into account if, during the winter of 2026-2027, Western central banks decide to seriously combat high hydrocarbon costs amid physical shortages in the markets of the European Union, the UK, Japan, and possibly the US," Koltashov said.
"The automotive, chemical, metallurgy, and fertilizer industries will be the most vulnerable," the expert noted.
Germany's industrial sector could prove particularly vulnerable given its dependence on energy costs, external demand, and access to credit. "The situation is exacerbated by physical shortages of hydrocarbons, fertilizers, and chemical products on the European market," Koltashov explained.