Iran war shocks continue to ripple through the global economy
361 Min Read
The war involving Iran is pushing up energy and fertiliser prices, raising concerns about inflation, food shortages in poorer countries and instability in fragile economies.
A key pressure point is the Strait of Hormuz, through which about a fifth of the world’s oil normally passes. The route has been largely disrupted since US and Israeli strikes on Iran began nearly two weeks ago.
Oil prices surged from below $70 per barrel in February to almost $120 earlier this week, before settling near $90. Higher crude prices are already feeding through to fuel costs, particularly in Europe and Asia, which depend heavily on Middle Eastern energy supplies.
According to Kristalina Georgieva, every sustained 10% increase in oil prices could raise global inflation by about 0.4% and reduce economic output.
Beyond energy, the disruption is also affecting fertiliser shipments, many of which transit the Strait of Hormuz. Rising fertiliser costs could push food prices higher, with low-income countries most exposed.
Economists warn the longer the conflict continues, the greater the risk of deeper economic disruption and renewed pressure on central banks trying to contain inflation.
