The US/Israel-Iran war has driven up oil prices and disrupted trade, impacting global economic growth and increasing inflation. Energy-importing manufacturing powerhouses, including Japan, South Korea and Germany, face pressure as commodity prices rise and global demand softens. By contrast, energy self-sufficient economies are better positioned. Exposure to Middle East energy flows and dependence on global trade are increasingly defining which economies can weather the disruption.
Delivery
This report comes in PPT.
Key findings
Strait of Hormuz disruption triggers global growth downgrade
The Strait of Hormuz blockage cut off the main export route for 28% of global oil and 11% of natural gas exports, pushing oil prices up by 30% over February-March 2026. As energy import bills surge and external demand weakens, Euromonitor has cut its global real GDP growth forecast to 2.9%, with advanced economies slowing to 1.5%.
Renewed inflation shock limits policy support
Rising oil prices are pushing global inflation to 4.7% in 2026, up from 3.6% pre‑war, with the pass-through extending beyond fuel into food and broader consumer prices. The rebound is sharpest in developing markets (forecast 5.8% vs 4.6% pre‑war), where weaker currencies, energy-intensive GDP, and limited fiscal buffers are amplifying the shock.
Energy dependence determines resilience
Energy-importing manufacturing powerhouses, including Japan, South Korea and Germany, face acute pressure as commodity prices rise and global demand softens. By contrast, economies with stronger domestic demand, more diversified energy supply and less reliance on trade are better placed to absorb the supply shock and disruption.
Spillovers compound vulnerabilities beyond energy
The disruption is no longer only about oil and gas. Higher freight costs and tighter fertiliser supplies are raising input prices for agriculture. At the same time, Gulf tourism has weakened sharply, and business confidence has deteriorated amid prolonged uncertainty. The crisis is exposing structural weaknesses in export-dependent and energy-intensive economies, with potential for lasting shifts in trade patterns and investment flows.
Oil supply disruptions put price stability and economic growth at risk
Key findings
Strait of Hormuz disruption sends shocks through the global economy
Oil shock weakens global growth outlook
Rising oil prices renews global inflation pressures
Duration of the US/Israel-Iran war is the key swing factor for global growth
GCC growth hit as exports disruption spreads beyond energy
UAE: Growth slows as war impacts both oil exports and services
Saudi Arabia: Rerouting helps but cannot offset wider disruption
Energy importers and export-led manufacturers face the biggest hit
Japan: Growth momentum fades as energy shock spreads
South Korea: Fragile recovery weakens as energy and input shocks hit manufacturing
Germany: Fragile recovery faces a renewed energy shock
Energy security and domestic demand underpins the most resilient economies
US: Growth slows but remains resilient under a prolonged war scenario
Questions we are asking
How to build resilience amid geopolitical tensions
Baseline and alternative scenarios: Q2 2026
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