The global economy is facing a broad and deep shock as disruptions linked to the Middle East war continue to strain energy markets, commodity supply chains, and financial stability, according to International Monetary Fund Director for the Middle East and Central Asia Department, Jihad Azour.
He noted that the centre of the shock is the energy sector, following severe disruptions in the Strait of Hormuz, a vital global trade route through which around one-fifth of the world’s oil and a significant share of liquefied natural gas normally pass.
Strikes and precautionary shutdowns have severely restricted activity in the strait, leading to a sharp reduction in global oil and gas flows and tightening international supply.
As a result, Brent crude prices surged above $100 per barrel, peaking at $118 before easing slightly following the announcement of a ceasefire.
European natural gas prices also rose sharply by around 60 percent, marking an even steeper increase than that seen after Russia’s invasion of Ukraine.
The disruption has spread beyond energy markets, affecting key global commodities such as fertilizers, metals, and industrial chemicals.
About one-third of global fertilizer trade passes through the Strait of Hormuz, while Gulf Cooperation Council countries play a major role in global exports of sulfur, ammonia, and nitrogen-based fertilizers.
Urea futures have risen by roughly 30 percent, while aluminum and phosphate prices have increased by around 20 percent due to supply constraints.
These rising costs are now feeding into higher global food prices, placing additional pressure on vulnerable populations in import-dependent regions across the Middle East, North Africa, South Asia, and Sub-Saharan Africa.
