Impact of the war in the Middle East on the global economy

The Middle East is, once again, at the center of global concerns. The outbreak of an armed conflict on 28 February 2026, on an unprecedented scale, has shaken the world.

The rapid escalation of hostilities poses major risks to global economic stability, particularly due to the disruption of shipping lanes essential to international trade.

Considerable damage and significant repercussions are already being observed in numerous sectors: marine transport, aviation, supply chains, energy, financial markets, and more.

The conflict thus extends far beyond the military sphere, becoming a major destabilizing factor, potentially triggering a systemic shock to the global economy, increased volatility in stock markets, and a resurgence of inflationary pressures.

The Strait of Hormuz and energy dependence

The closure of the Strait of Hormuz, a strategic passage linking the Persian Gulf to the Indian Ocean, has exacerbated tensions. This narrow sea lane handles the daily transit of approximately 17 million barrels of oil, accounting for nearly 30% of global crude oil trade and 20% of global liquefied natural gas (LNG) flows.

Any disruption to this strategic corridor extends far beyond the regional context with immediate repercussions on energy markets, supply chains, and, more broadly, international trade.

The blockade of the Strait of Hormuz therefore raises serious concerns regarding marine exports from several Middle Eastern countries, notably Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, and Qatar. An immediate and significant surge in commodity prices is already being felt.

Dependence of energy exports on the Strait of Hormuz

As mentioned above, exports from the region’s major oil producers are heavily dependent on transit through the Strait of Hormuz.

Iraq, Kuwait, and Qatar are among the most vulnerable countries, as they are entirely dependent on this waterway. A prolonged closure would cause a near-total disruption of their export revenues, leading to a major fiscal crisis. These countries derive between 82% and 90% of their government revenues from oil passing through the strait.

Although also affected by the closure of the Strait, Saudi Arabia and the United Arab Emirates have partial bypass capabilities thanks to alternative infrastructure.

These solutions remain insufficient and could reduce their export capacity by 50% to 80%, with direct repercussions on their fiscal balance and financial stability.

Dependence level of major exporting countries on the Strait of Hormuz in 2024

Source: Ballast Markets

Level of dependence on oil imports from the Persian Gulf

Due to their high energy dependence and lack of alternatives, Japan and South Korea are among the most vulnerable economies. A prolonged closure of the Strait of Hormuz, lasting more than 90 days, could trigger major economic disruptions.

In such a scenario, the gradual depletion of strategic reserves is likely to result in resource rationing, threatening global energy security.

Source: Ballast Markets

Impact of the war in the Middle East on maritime traffic

Since the start of the conflict, maritime traffic in the Strait of Hormuz has come to a complete standstill. This strategic route now sees only 2 to 4 ships passing through per day, compared to a daily average of 153 before the conflict, reflecting a reduction of more than 95% in commercial traffic, which even dropped to zero ships on 15 March 2026.

Maritime traffic in the strait of Hormuz between 17 February and 15 March 2026

Impact of the war in the Middle East on air traffic

In addition to maritime disruptions, the conflict has led to the closure of several airspaces and massive flight diversions. As a result, hundreds of thousands of travelers found themselves stranded after the hubs in Dubai, Abu Dhabi, and Doha were paralyzed.

Since 28 February 2026, more than 52 000 flights have been canceled, representing more than half of the traffic on the Europe/Africa/Asia route, affecting more than 6 million passengers.

During the first three weeks of the conflict, cancellation rates reached 93% for Qatar Airways, 79% for Etihad, and 54% for Emirates. In addition, 13% of global air cargo capacity was grounded in early March.

Security-related uncertainty is not the only factor behind the cancellations. Indeed, the surge in jet fuel prices is forcing some airlines, such as the Scandinavian carrier SAS and the American carrier United Airlines, to reduce their capacity and cancel “traditionally unprofitable” flights.

Other airlines, however, have chosen to deflect the increased costs on ticket prices, the case for Air France-KLM, Cathay Pacific, Air India, and Qantas.

Trends in air traffic in the Gulf countries before, during, and after the outbreak of war

Air traffic in the Gulf is struggling to return to pre-war levels.

Energy crisis and market volatility

The countries of the Gulf Cooperation Council (GCC) supply approximately 20% of the world’s energy resources. The disruptions caused by the conflict have forced them to halt or reduce their oil and gas production.

Even in the best-case scenario, that is, a swift end to the conflict, infrastructure is not poised to return to full capacity anytime soon.

From the start of the conflict, several refineries and other hydrocarbon production facilities have sustained significant damage. Other sites remain shut down due to the closure of the Strait of Hormuz.

In this chaotic environment, oil and gas prices are skyrocketing while supply chains are severely disrupted. Ultimately, the entire macroeconomic environment is weakened, creating significant operational risks for many sectors, including:

• Hydrocarbons: The price of a barrel of Brent crude has risen by 60% since the start of the conflict, reaching 116 USD on 19 March while oil and gas prices remain volatile.
• Agriculture: Agricultural production and food supplies are heavily dependent on energy production and fertilizer prices. Current supply chain disruptions could threaten global food security. It is worth noting that one-third of global fertilizer production passes through the Strait of Hormuz.
• Socio-political stability: Some countries, such as India, could see their social stability undermined due to shortages and rising prices of staples.
• Electronics: Supply chains are severely disrupted, impacting aluminum and helium production. The Middle East accounts for 9% of global aluminum production, while Qatar alone supplies 30% of the world’s helium, an essential gas to the semiconductor industry and medical imaging.
• Air travel: A closure of the Strait of Hormuz lasting more than 90 days would result in direct losses of several billion dollars for airlines. Rising jet fuel prices would lead to the cancellation of several thousand flights worldwide.
• The refining industry in Asia: As their strategic reserves run low, Asian refineries, which are highly dependent on oil transiting through the Strait of Hormuz, are heading toward a shutdown.
• Financial markets: The climate of political instability prevailing in the Middle East is causing high volatility in stock markets, a strain that could be compounded by a resurgence in global inflation rates.

Cyber risks

The conflict in the Middle East is not confined to pipelines and marine and airspace. Cyberspace has also become a hot battlefield, affecting both the Middle East and Western economies, disrupting critical infrastructure and digital supply chains.

Cybersecurity is now a major strategic issue, a crime that poses a feared systemic risk, capable of causing massive losses and affecting multiple economic sectors.