On March 19, the European Central Bank (ECB) suspended the planned reduction of interest rates and left them at the level of two percent. Instead of the expected revival of the world economy, something quite the opposite is now threatening stagflation – that is, a combination of zero economic growth and rapidly rising prices (inflation).
Even industrial giants in Germany and Italy, dependent on energy supplies, are beginning to limit production. The prices of diesel and jet fuel have more than doubled, which has practically paralyzed low-cost air transport and significantly increased the cost of logistics.
If the blockade lasts until the summer, we are in danger of a technical recession, the depth of which we dare not estimate today, analysts warn
Disaster in numbers: From billion-dollar damages to empty shelves
The balance sheet of direct economic damage is breathtaking. The Iranian government estimates that the bombing of military bases, government buildings, and energy facilities caused anywhere from $300 billion to a whopping $1 trillion in damage. Iran’s rial has lost more than 90% of its value since the start of the conflict, and inflation in the country is running rampant above 50%.
Israel calculated its economic losses to date at 11.5 billion dollars. The Pentagon has already managed to ask the US Congress for an additional 200 billion dollars to cover the costs of military operations, while the war cost US taxpayers 18 billion only until the end of March.
However, the crisis also affects industries that, at first glance, are not related to oil. The closure of the strait has crippled exports of liquefied natural gas (LNG) from Qatar. After the attack on Qatar’s key gas facilities, the country’s export capacity fell by 17%, forcing QatarEnergy to declare a state of “force majeure” on all its supplies.
From fertilizers to helium: Supply chains at risk
The world’s farmers are also watching the fertilizer market with concern. The Persian Gulf region is their key producer, and supply disruptions threaten a sharp rise in food prices in the second half of 2026.
The problem is also the critical lack of helium and aluminum, the prices of which on world exchanges are recording record highs.
For Asia, namely China, India, Japan and South Korea, which take up to 75% of Middle Eastern oil, this is an existential threat.
China’s industry is starting to show signs of overheating due to high input costs, which could result in further disruption of global electronics and consumer goods supply chains.
What awaits us next?
According to the CEO of Vitol, Russell Hardy, the world will irretrievably lose up to one billion barrels of oil production due to a war with Iran. By April 21, the shortfall amounted to approximately 700 million barrels.
Although Washington and its allies are trying to secure alternative routes – for example through the Saudi Arabian East-West pipeline (Petroline) – its capacity is nowhere near enough to replace the Strait of Hormuz.
While before the war, Saudi Arabia exported 6 million barrels a day through Hormuz, it can currently transport only a fraction of this amount through the inland pipeline.
The World Trade Organization (WTO) cut its forecast for global GDP growth for 2026 by 0.3 percentage points, but added in the same breath that if the conflict lasts longer than the end of April, the decline will be much more drastic.
As military commanders plan further operations, markets are praying for a diplomatic solution. But one thing is certain – even if the fighting between the US and Iran stopped tomorrow, the scars this war has left on world trade will take years to heal.
According to the Financial Times, the future of the military conflict between the US, Israel and Iran remains shrouded in uncertainty, which stems mainly from the unpredictability of Donald Trump and the intransigence of the Iranian regime.
While publicly declaring that the war will end “very soon,” Trump has also taken to social media to demand the “unconditional surrender” of Tehran — a scenario that experts consider unrealistic without the use of nuclear weapons.
Development scenarios and oil shock
The Iranian side, represented by the Iranian Revolutionary Guards, responds to threats by being prepared to stop oil exports from the entire region. According to the analysis Capital Economicscited by the Financial Times, there are three main economic scenarios depending on the length and intensity of the fighting: Short conflict (2 weeks), which would mean a loss of approximately 1.4% of global oil and LNG exports. Medium-long conflict (3 months with limited damage), which would mean a decrease in the world export of energy raw materials by 6%. And finally Destructive conflict (3 months with serious damage to infrastructure), when oil prices could jump to 150 USD per barrel and gas prices in the EU at 120 €/MWh. This shock would be comparable only to the oil crisis at the turn of the 70s and 80s.
Despite the dire numbers, the Financial Times notes that the world economy is more resilient today than in the past. We are less dependent on oil, central banks know how to work better with inflationary expectations, and Europe has demonstrated its ability to adapt to high energy prices already during the war in Ukraine, the more optimistic reports say.
However, according to experts, the negative ones sound like this – the world has practically no chance of avoiding a new economic crisis, also thanks to the war with Iran. How big it will be will become clear in the coming months.
