The economic impacts of the war in the Middle East are worsening, affecting energy markets, supply chains, and global growth. Tensions continue surrounding the Strait of Hormuz, which is a vital artery for global oil trade.
In this context, US President Donald Trump appealed to countries importing oil through the Strait to “assume their responsibilities” and secure this extremely important waterway, stressing the need to “protect and use it,” in light of the continued military operations against Iran.
At the same time, oil prices witnessed a noticeable rise, as the price of Brent crude jumped by nearly 7% to reach $108.15 per barrel, while West Texas Intermediate crude rose by more than 8% to reach $108.11, due to Trump’s statements about continuing the military attacks for additional weeks, without providing any solutions to the crisis of closing the strait.
These events were quickly reflected in the global economy, as Chinese airlines, including Air China, announced an increase in fuel fees on domestic flights, reflecting the high cost of energy.
In the Southeast Asia region, Anwar Ibrahim announced the implementation of a remote work policy in government institutions starting April 15, with the aim of reducing fuel consumption and ensuring stable supplies.
As for Europe, British Prime Minister Keir Starmer announced the holding of a meeting of about 35 countries to discuss ways to reopen the Strait of Hormuz and ensure the safety of navigation, while France is preparing to take measures to rationalize energy consumption, amid rising fuel prices and shortages at some stations.
At the same time, the World Bank expressed “deep concern” about the effects of the war on inflation, food security and the labor market globally, noting coordination with the International Monetary Fund and the International Energy Agency to meet emergency needs.
The Bank of England also warned that the war had caused a “significant negative supply shock” to the global economy, increasing inflationary pressures and putting growth at risk, while economic institutes lowered their forecasts for German economic growth to 0.6% this year.
In the United States, data from the US Energy Information Administration showed a decline in the strategic reserve of oil, with continued pressure on supplies.
Even distant countries were not spared these effects, as the Kingdom of Bhutan announced an increase in fuel prices as a result of a shortage of supplies, which led to overcrowding at gas stations.
These developments come in light of the ongoing war between the United States and Iran, which has disrupted shipping traffic in the Strait of Hormuz, through which a large portion of global oil exports passes.
With faltering supplies and rising costs of shipping and insurance, global markets are facing a new wave of inflation, while countries seek to take immediate measures to alleviate the pressure on their economies.
This scene reflects the extent of the interconnectedness of the global economy, as the effects of any escalation in the Gulf region quickly extend to various continents, putting the world before a new economic test in light of a very complex geopolitical environment.
