Joshua Kurlantzick
In a matter of weeks, the Iran war has generated massive uncertainty about the future of the Middle East and rocked the global economy. The price of oil has skyrocketed as Tehran has essentially closed the critical Strait of Hormuz and many oil and liquefied natural gas producers in the Persian Gulf have shuttered or cut back operations. Every major stock market has fallen since the war started, and central bankers, economists and policymakers have projected that a drawn-out war could cause inflation to spike and undermine economic growth worldwide.
According to the International Monetary Fund’s managing director, Kristalina Georgieva, a 10 percent increase in energy prices that lasts a year would increase global inflation by 40 basis points and slow global economic growth. Indeed, the war has already plunged the world into its “largest-ever” disruption in oil supplies, according to the International Energy Agency.
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