GDP Stalled, Confidence Dropping: Is the French Economy Facing an Oil Shock?

Growth Already Stalled Before Full Impact of Energy Shock

According to the first estimate by Insee, the French GDP remained stable in the first quarter of 2026, while forecasts had recently predicted growth between 0.2% and 0.3%. This discrepancy reflects sluggish domestic demand and a negative contribution from foreign trade.

Specifically, construction declined by 1.5%, particularly in public works, while exports decreased following the strong aerospace deliveries recorded at the end of 2025. As a result, foreign trade has ceased supporting activity, after having played a cushioning role at the end of last year.

Insee highlights that the effects of the Middle East conflict are expected to weigh primarily from the second quarter. Thus, the starting point of the energy shock is hitting an economy already lacking internal drive, reducing the ability to absorb further deterioration in the terms of trade.

Brent at $125: An Oil Shock Approaching a Structural Scenario

Brent reached $126.41 on Thursday morning before settling around $124.50, marking its highest level since March 2022. The American WTI stood at $109.40, up 2.4%. The barrel has doubled from its level before the attack by the United States and Israel against Iran on February 28, 2026.

The Strait of Hormuz remains blocked, and the White House is reportedly considering maintaining this blockade for several months, with Donald Trump stating it is a measure « a bit more effective than bombings. » Additionally, the market is dealing with saturated storage capacities in the Gulf and the limitation of Iranian exports. This dynamic extends the already described upward trajectory when Brent crossed the $114 mark and Europe accumulated over 27 billion euros in additional costs in just sixty days.

Diplomatically, Vladimir Putin has warned Donald Trump about the consequences of further military action against Iran, suggesting, according to the Kremlin, that extending the ceasefire could give negotiations a chance. Analysts note that the market may not have fully accounted for the implications of a prolonged conflict: if some wells were to be shut down permanently, the risk would exceed mere supply disruption to become structural.

Inflation at 2.2%, declining confidence: transmission channels to the French economy

The provisional estimate from Insee published on April 30 indicates a 2.2% increase in consumer prices over one year in April, after 1.7% in March and 0.9% in February. The harmonized index of consumer prices (HICP), used for European comparisons, would reach 2.5% over one year. The acceleration mainly stems from energy, with prices rising by 14.2% over one year in April compared to 7.4% in March, driven by diesel, gasoline, and liquid fuels.

The figure exceeds the forecast by 0.4 percentage points from Insee's March economic outlook note, which predicted 1.8% in April. This gap, though limited in absolute terms, illustrates how quickly the increase in the oil barrel spreads to the general index.

Opinion surveys confirm the impact on economic agents. Insee reports that the business climate significantly darkened in April, and consumer confidence recorded its sharpest decline since March 2022. The combination of accelerating energy inflation, stagnant activity, and the simultaneous deterioration in both business and consumer confidence presents a monitoring point for the second quarter, a period during which Insee anticipates the full effect of the shock.