War in Middle East Threatens Global Economy with Oil Price Spikes and Supply Disruptions

The four-week war in the Middle East has had a devastating impact on the global economy, with soaring energy prices fueling global inflation fears. Top economists warn that oil prices could rise to $150 per barrel, which could trigger a global recession. The World Bank has pledged to support vulnerable economies affected by the global price spikes and supply disruptions.

The four-week conflict in the Middle East has triggered the largest oil supply disruption in history, with Iran's closure of the Strait of Hormuz removing approximately 20 million barrels per day from global markets. Brent crude has surged past $110 per barrel, and top economists warn prices could reach $150 if the conflict persists, potentially tipping the global economy into recession.

The International Energy Agency responded by coordinating the release of 400 million barrels from strategic reserves among member countries, the largest such action since the 1991 Gulf War. Gulf oil-producing nations have been forced to cut total output by at least 10 mb/d as storage fills and tanker traffic through the Strait has collapsed to a trickle. War-risk insurance premiums have soared, and freight costs are rising across both energy and non-energy trade.

The World Bank has pledged to support vulnerable economies hit hardest by the energy price shock. Beyond oil, the cascading effects are reshaping global supply chains, with shipping routes being rerouted and production timelines disrupted across multiple industries. Investors are closely watching diplomatic developments, as Trump's extension of the Iran strike deadline to April 6 provides a narrow window for negotiations.