By Marta Vilar - MADRID (Econostream) - European Central Bank Governing Council member José Luis Escrivá said on Tuesday that lower oil prices following the recent US-Iran agreement might not fully capture the supply disruptions caused by the war in the Middle East.

Speaking during a fireside chat at a PwC event in Madrid, Escrivá, who heads the Banco de España, said oil production remained around 15% below pre-war levels.

“This is significant,” he added, noting that oil inventories were already at very low levels and that higher energy prices could feed through to inflation.

“What makes this situation different from other crises is the disruption that has occurred to supply and production,” he said. “Even if the conflict is brought under control, and even if prices reflect that relatively quickly, it is not certain that markets will be able to fully capture the disruptions that have taken place on the supply side, or the scale of the challenge and the time it will take to restore production.”

He described the outlook as highly uncertain and warned that the effects of the disruption were likely to persist for some time.