Don’t be popping those champagne corks yet: Europe’s economy will still be hurting from the war in the Middle East for months — and maybe longer.

Financial markets rallied exuberantly on Wednesday in relief at the announcement of a two-week ceasefire by the U.S. and Iran overnight. Investors and traders rushed to tone down expectations of a nightmare scenario in which spiking energy prices would crush growth and stoke higher inflation.

The euro and pound both leaped versus the dollar, while bond yields fell as the fear of interest rate hikes from the European Central Bank and Bank of England receded. Speculation that the ECB might raise rates as soon as April 30 has now all but evaporated.

But the damage done to the world’s supply chains, especially for energy, will simply not be undone overnight, even if — and it’s a big ‘if’ — the ceasefire holds, analysts say.

“A temporary pause is just that — and both sides of the conflict have established a renewed reputation for unpredictability,” said Simon French, chief economist with London investment bank PanmureLiberum, via X.

Moreover, said Peel Hunt chief economist Kallum Pickering, “Even if this truce marks the genuine end of fighting, some economic damage is already baked in.” He warned that whatever happens from here on, inflation will be higher and growth will be slower in the second half of this year, relative to what was expected in February, before the war started.

While the two sides have agreed to start peace talks in Pakistan on Friday, both still seem far apart on key issues, notably the terms on which oil, gas and chemicals can pass in and out of the Persian Gulf, the most important shipping lane for world energy supply. The two sides are also presenting starkly different takes on whether Iran will be able to continue enriching uranium for its nuclear project.

Within hours of the announcement of talks, Iran had launched fresh attacks on key oil export infrastructure in Saudi Arabia and Kuwait, both U.S. allies, while The Wall Street Journal reported that Iran’s navy is still threatening to sink any ship that tries to pass the Strait of Hormuz at the entrance to the Gulf without negotiating terms. Israel, for its part, continued airstrikes in Lebanon against suspected Hezbollah targets, causing heavy collateral damage.

One key problem stands out: even if shipping is allowed to move relatively freely, the infrastructure that produces and loads the oil and gas onto the ships has suffered real damage, the extent of which is not yet fully known.

QatarEnergy has said Belgium and Italy will have to wait three years or more before it can resume promised deliveries of liquefied natural gas from the Ras Laffan complex, which was hit by Iranian drones in March.

The attack on Ras Laffan was one of many across the region by Iran looking to raise the economic cost of continuing the war for the U.S. and its Gulf allies. Others have hit Saudi Arabia’s massive petrochemicals complex at Jubail. Damage assessments there are still ongoing, but the Sadara joint venture between U.S. chemical giant Dow and Saudi Aramco — a major supplier of plastics and inputs for other industries — has been shut indefinitely.

“The disruption to supply lines for crude oil, gas, petrochemicals and other key raw materials will take many months to restore,” said ADM ISI strategist Marc Ostwald in a note to clients.

That means that commodity prices — not just for energy, but also for metals and products such as helium (an essential input for the production of silicon chips) — are likely to stay higher for longer, adding to a general inflationary bias that was already evident in the economy before the war, said French. Ominously, benchmark futures prices for natural gas delivery in Europe over the summer, when the continent’s storage facilities need to be refilled, are still over 40 percent higher than they were in February.

The point isn’t lost in Brussels.

“What we can already foresee,” European Commission spokeswoman Anna-Kaisa Itkonen told reporters Wednesday, “is that this crisis will not be short-lived.”