The International Monetary Fund (IMF) warned that disruptions linked to the Middle East conflict have triggered the largest shock to global oil markets in history, amplifying inflation risks and straining economies dependent on fuel imports.
Energy has emerged as the primary transmission channel, with the effective closure of the Strait of Hormuz and damage to regional infrastructure severely constraining supply. Citing the International Energy Agency, the IMF said the scale of the disruption is unprecedented, with fuel-importing nations facing what amounts to a sharp, sudden tax on income.
The impact is being felt unevenly across regions. Energy-importing economies in Africa, the Middle East and Latin America are grappling with rising import bills, compounding already limited fiscal space and weakening external buffers. In Asia’s manufacturing hubs, higher fuel and electricity costs are feeding into production expenses and eroding consumer purchasing power, while in some cases intensifying balance-of-payments pressures and currency weakness.
In Europe, the shock is reviving concerns last seen during the 2021–22 gas crisis. Countries such as Italy and the United Kingdom are particularly exposed due to their reliance on gas-fired power generation, while France and Spain are relatively shielded by stronger nuclear and renewable energy capacity.
Oil-exporting economies, by contrast, stand to benefit from higher prices, particularly in parts of the Middle East, Africa and Latin America that can sustain exports. However, the IMF cautioned that producers facing logistical constraints, including some members of the Gulf Cooperation Council, may see limited upside. Even where exports continue, elevated geopolitical risk and higher insurance costs are expected to damp investment and longer-term growth.
Beyond energy, the conflict is reshaping global supply chains. Rerouting of tankers and container ships is increasing freight and insurance costs while extending delivery times, adding to inflationary pressures. Disruptions to air traffic through Gulf hubs are also weighing on tourism and complicating trade logistics.
Critical commodity flows are also under strain. About one-third of global fertilizer shipments pass through the Strait of Hormuz, and disruptions are raising concerns about food supply just as planting season begins in the Northern Hemisphere. The IMF warned that reduced access to crop nutrients could lower yields and push food prices higher through the year.
The burden is expected to fall disproportionately on low-income countries, where food accounts for a significantly larger share of household spending. Rising prices for staples and inputs risk exacerbating food insecurity and triggering broader social and political pressures, particularly in economies with limited fiscal capacity to respond.
The Fund also highlighted risks to industrial supply chains, noting that the Gulf is a major supplier of helium, a key input for semiconductors and medical equipment. Meanwhile, countries such as Indonesia could face shortages of sulfur needed for nickel processing, with implications for electric-vehicle battery production.
Eastern African economies are also exposed through trade and remittance links with Gulf countries, facing weaker demand for services exports alongside logistical bottlenecks and reduced inflows.
The IMF said the combined effects of energy disruption, supply chain strain and rising commodity prices are likely to reinforce inflationary pressures globally while weighing on growth, particularly in the most vulnerable economies.
