Europe
For the European part, the conflict takes place in the midst of a nascent but still fragile economic transition.
Already in 2023, the ECB was trying to manage the possible consequences of a protracted conflict in the Middle East that would reduce the transport of energy products through the Strait of Hormuz by a third. In such a scenario, the energy shock led to a decline in euro area growth of 0.6 percentage points and an increase in inflation of 0.8 percentage points compared to the baseline scenario.
If the same effects are transferred to the current forecasts for 2026, the result is growth of 0.6 percent and inflation of 2.7 percent, i.e. above the inflation target.
However, at least in the short term, there is a clear winner. The price of Russian oil has skyrocketed in line with the world market price, and as the world’s largest net exporter of natural gas, Russia benefits twice.
This adds to the strained state treasury, which derives around 30 percent of its revenue from the oil sector. However, the boost from rising energy prices is being dampened by ongoing Ukrainian attacks on the country’s production capacity.
Asia
Much of the energy produced in the Middle East is sold primarily to Asia. In Japan and South Korea, for example, energy stocks are well stocked, reducing risk in the short term.
Things are even worse in China and India, two countries that significantly increased their imports from the Middle East last year and are also among the world’s largest energy importers.
China imports about 70 percent of its gas and oil consumption, and Chinese authorities have now ordered the country’s largest refiners to stop exporting oil products such as gasoline and jet fuel and instead prioritize domestic demand.
But analysts point out that well-stocked strategic stocks and a wide range of countries from which to import serve as an airbag for China in the acute crisis.
In comparison, India appears to be more vulnerable. According to the Reuters news agency, oil stocks at the beginning of March corresponded to 20 to 25 days of consumption. Dependency on the Middle East has increased as India has reduced its imports of Russian oil – with more than half of its imports coming through the Strait of Hormuz at the start of the year, according to S&P Global.
The conflict also has a direct impact on the approximately 10 million Indian migrant workers who the Indian government estimates are in the region and who help boost domestic household consumption by sending money home to relatives and family members.
USA
The US economy appears to have slowed towards the end of last year, when growth fell significantly. Now there are already signs that the rise in oil prices is also reaching consumers in the form of more expensive gasoline. In the past week alone, the average price of gasoline in the United States has increased by 9 percent.
But in contrast to China and Europe, the USA is self-sufficient in the energy sector. For example, the country produces large quantities of shale oil. More expensive oil therefore affects households, for example, but benefits the oil sector, which has a less negative impact on growth than in Europe, for example.
Things are even worse when it comes to inflation, which at 2.4 percent is still slightly above the Federal Reserve’s target. Even before the conflict with Iran broke out, there were signs that inflation had picked up again, including measurements showing that corporate purchasing prices had risen more sharply than at any time since 2022.
The price of oil is set on the global market, meaning that even American oil producers have the chance to raise their prices now that supplies in the Middle East are disrupted. US WTI oil has risen 15 percent since last weekend. According to calculations by Morgan Stanley and Goldman Sachs, among others, every increase of 10 percent leads to 0.3 to 0.4 percentage points higher inflation.
The Middle East
The countries around the Persian Gulf are not as important a growth engine for the global economy as, for example, China or the USA, but the effects of shutting down large parts of energy production can still be large.
Iraq announced on Tuesday that it would cut oil production by around a quarter as supplies are now beginning to fill up.
If the war lasts 15 days, production in the region would have to be cut by 3.8 million barrels per day, according to an analysis by major bank JP Morgan. That represents a little less than 4 percent of daily world production and about a fifth of the amount of oil normally shipped through the Strait of Hormuz each day.
Read more:
In this way, the USA benefits from the EU’s urgent gas needs
Carl Johan from Seth: The global economy cannot count on Trump being a coward in Iran
Experts: The risks for the oil market are underestimated
