Jamaine Punzalan

Article (news)

Agence France-Presse

<div><span class="fr-img-caption fr-fic fr-dib" style="width:960px;display:block" width="960"><span class="fr-img-wrap"><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/17724985749771772498571738.png" style="width:960px;display:block;height:auto" class="fr-fic fr-dib" width="960"/><span class="fr-inner" style="text-align:left">Plumes of smoke rise following reported explosions in Tehran on March 1, 2026. Atta Kenare, AFP</span></span></span></div><div><br/></div><div><br/></div><p>An extended conflict in the Middle East after the US and Israel launched strikes on Iran could trigger global stagflation -- a troublesome blend of high inflation and anaemic growth -- due to spiking oil and gas prices, economists warned.</p><div><br/></div><div><strong>Will there be an oil shock?</strong></div><div><br/></div><p>The conflict has nearly halted traffic through the<a href="https://www.abs-cbn.com/news/world/2026/3/3/iran-guards-will-burn-any-ship-trying-to-pass-through-hormuz-general-0746"> Strait of Hormuz</a>, through which around 20 percent of global seaborne oil passes, with several ships attacked.</p><p>Global oil prices shot higher on Monday, with the Brent crude international reference oil contract up nearly nine percent at $79.30 per barrel at 1410 GMT.</p><p>It briefly surpassed $80 per barrel earlier in the day, and was up considerably from the $61 per barrel at the start of the year.</p><p>Economist Sylvain Bersinger said the war risks &quot;creating a third oil shock after those in 1973 and 1979 and the 2022 gas shock&quot;.</p><div><a href="https://www.abs-cbn.com/news/business/2026/3/2/doe-calls-for-emergency-meeting-oil-prices-to-go-up-due-to-closure-of-strait-of-hormuz-0950">DOE calls for emergency meeting, oil prices to go up due to closure of Strait of Hormuz</a></div><p>Europe&#x27;s benchmark gas price shot more than 50 percent higher on Monday.</p><p>He said the price of oil could rise to $110 per barrel, but added that was no longer exceptional as oil prices had risen over $140 in 2008 and were above $100 in the 2010s.</p><p>Adam Hetts at asset manager Janus Henderson said that while oil prices would certainly rise, the increase should remain &quot;at reasonable levels&quot;.</p><div><a href="https://www.abs-cbn.com/news/nation/2026/3/2/dotr-mulls-fuel-subsidy-as-oil-prices-surge-on-iran-conflict-1208">DOTr readies fuel subsidy as oil prices surge on Iran conflict</a></div><div><br/></div><div><strong>What impact on global trade? </strong></div><div><br/></div><p>The conflict could act as a shock to trade &quot;at the worst possible moment&quot;, said economists at ING bank.</p><p>The global trading system is already under stress from US President Donald Trump&#x27;s tariff offensive as well as the fragmentation of supply chains since Covid and the war in Ukraine.</p><p>Moreover the closure of the Gulf airspace is disrupting aviation between European and Asia, they noted.</p><p>For Ruben Nizard, head of political risk research at Coface, a trade credit insurance company, this crisis could also &quot;throw another wrench into the works by driving up maritime freight costs&quot; and pushing up inflation.</p><p>&quot;At the global level, this would open the door to an economic scenario of stagflation,&quot; he added, referring to a situation with high inflation and weak or non-existent growth.</p><div><br/></div><div><strong>What impact on the global economy? </strong></div><div><br/></div><p>According to economists at Natixis bank, a prolonged disruption of traffic in the Strait of Hormuz &quot;would have major implications for markets, but also for inflation dynamics and overall economic stability&quot;.</p><p>They added that &quot;China would be particularly affected by this war.&quot;</p><p>Cyrille Poirier-Coutansais, director of the research department at the French Navy&#x27;s Centre for Strategic Studies, agreed that China is particularly dependent upon oil shipped through the Strait of Hormuz.</p><p>&quot;The question is whether there will be enough fuel to keep the world&#x27;s factory running,&quot; he told AFP.</p><p>For the economist Sylvain Bersinger the impact on Europe will likely be less than the 2022 gas shock, which would help France in particular to avoid a recession.</p><p>In a sign of declining investor confidence, the interest rate on European sovereign bonds climbed on Monday.</p><p>The yield on 10-year German government bonds, the benchmark in the eurozone, stood at 2.70 percent in afternoon trading, compared with 2.64 percent on Friday.</p><div><br/></div><div><strong>What risks in a long war? </strong></div><div><br/></div><p>The intensity and duration of the conflict will be key in determining its impact.</p><p>&quot;In a prolonged conflict, the combination of higher energy costs, disrupted logistics, and a generalised confidence shock would constitute a meaningful drag on global trade volumes at precisely the moment the world economy was still digesting the inflationary and growth consequences of the tariff shock,&quot; said economists at ING bank.</p><p>Coface&#x27;s Nizard said they estimated that &quot;an increase of roughly 15 dollars in the price of Brent over a prolonged period could shave about 0.2 percentage points off global growth and add almost half a point to inflation.&quot;</p><p>These are &quot;not insignificant&quot; effects in a context of &quot;fairly fragile global economic growth&quot;, he added.</p>

<p>An extended conflict in the Middle East after the US and Israel launched strikes on Iran could trigger global stagflation -- a troublesome blend of high inflation and anaemic growth -- due to spiking oil and gas prices, economists warned.</p>

An extended conflict in the Middle East after the US and Israel launched strikes on Iran could trigger global stagflation -- a troublesome blend of high inflation and anaemic growth -- due to spiking oil and gas prices, economists warned.

Mideast war risks sending global economy into stagflation

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Mideast war risks sending global economy into stagflation

Agence France-Presse

Published March 03, 2026 08:47 AM PHT

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