Schnabel's remarks keep a further ECB rate hike nominally on the table even as markets increasingly doubt one will follow the July 22-23 meeting. Her focus on elevated crack spreads, sticky core inflation and lingering supply chain pressure signals the ECB is wary of reading too much into the recent oil price retreat. Wunsch's more relaxed tone, by contrast, points to a widening gap within the Governing Council over how much weight to give the easing energy backdrop. With traders already paring back tightening bets, any further softening in oil or gas prices would likely reinforce the case for holding steady rather than hiking again.---ECB board member Isabel Schnabel says falling oil prices do not mean a return to pre-war conditions, citing still-high gas prices and core inflation, even as fellow policymaker Pierre Wunsch sounds more relaxed on the outlook.Earlier here:ECB Schnabel: Current price shock cannot simply be looked through.Summary:The euro zone economy has not returned to its pre-Iran war state despite falling oil prices, with core inflation still strongGas prices remain around 40% higher than before the war, and markets still point to higher oil prices over longer horizonsCrack spreads, a measure of refiner profitability, are running at twice their pre-war levelsNew risks include a European heat wave, a potential Super El Nino and low Rhine water levelsA second ECB rate hike at the July 22-23 meeting looks increasingly unlikely, though not ruled outBelgian central bank governor Pierre Wunsch struck a more relaxed tone, saying energy price shocks appear to have faded from marketsThe euro zone has not returned to the economic conditions that prevailed before the US-Iran conflict, European Central Bank Executive Board member Isabel Schnabel said on Monday, even as oil prices have fallen sharply since the fighting eased. Speaking on a panel in Rome, Schnabel said the peace deal underpinning the drop in energy prices remains fragile, and that markets still point to higher oil prices over longer time horizons. Gas prices, she noted, are still running about 40% above pre-war levels.Schnabel pointed to several signs that price pressures have not fully unwound. Crack spreads, which measure refiner profitability, are twice their pre-war levels, she said, while pipeline and supply chain pressures remain elevated and core inflation has yet to meaningfully cool. She also flagged a run of fresh risks facing the bloc, including a European heat wave, a possible Super El Nino weather pattern that could push up food prices, and Rhine water levels approaching critical thresholds that could disrupt shipping and industrial supply chains.Her comments keep the door open to further policy tightening, even as a second interest rate hike at the ECB's July 22-23 meeting looks increasingly unlikely. Markets have pared back bets on additional hikes this year after some policymakers suggested the worst of the energy shock has passed. Belgian central bank governor Pierre Wunsch, speaking on the same panel, struck a notably calmer tone, saying the war-related shock to energy prices appears to have disappeared from market pricing, with oil and gas potentially returning to, or even falling below, their pre-war levels before long. He argued the ECB should not wait too long if it intends to deliver one final rate increase, warning of the risk of hiking just as the trend reverses.The contrasting emphasis from Schnabel and Wunsch underscores a live debate within the Governing Council over how quickly to declare the energy shock over, with the ECB's next policy meeting now shaping up as a key test of that divide. This article was written by Eamonn Sheridan at investinglive.com.