The widening Middle East conflict could disrupt global trade flows, fuel inflation and slow economic growth if energy supplies through key shipping routes are affected, according to the International Monetary Fund (IMF). Dan Katz, Deputy Managing Director at the IMF, said the conflict could be very impactful on the global economy across indicators such as inflation and growth if tensions escalate further. Shipping and logistics networks are already showing signs of strain, with cargo delays, rising freight costs and supply chain disruptions emerging across sectors, including food and fertilisers.
The biggest risk centres on the Strait of Hormuz, a vital maritime corridor through which around 20% of global oil and liquefied natural gas shipments pass daily. Energy markets have reacted sharply, with Brent crude hitting an 18-month high, raising concerns of sustained fuel price inflation. Analysts warn prolonged disruption could push global inflation higher, increase borrowing costs and slow economic expansion, particularly in energy-dependent regions such as Asia and Europe, according to a report.
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