War Has Economic Winners, Losers --- Wild swings in oil and natural-gas prices reverberate across the globe

“The economic shock waves of the Iran war are leaving no part of the world untouched.

 

Economists are wrestling with two divergent scenarios for the global economy. In the first, the conflict ends quickly, allowing oil and natural-gas prices to normalize by the summer, and leaving growth and inflation largely unscathed.

 

In the second, prolonged energy disruptions show up in everyday costs such as groceries and travel. Goldman Sachs's pessimistic scenario shows oil rising back to $100 a barrel and staying elevated, wiping about half a percentage point off global growth and boosting inflation by nearly 1 percentage point during the next year.

 

In the past decade, the fracking boom has transformed the U.S. into a net energy exporter, reducing its vulnerability to oil shocks. But the world's largest economy isn't fully shielded. The price of a gallon of regular unleaded gas shot up 20% since the war began. That could leave households with less to spend on other things. Higher fuel costs also threaten profits of airlines, cruise operators and industrial firms, but could buoy U.S. energy producers.

 

A brief war could lead to Gulf economies contracting by up to 2% this year, while prolonged clashes might trigger a 15% decline, according to Capital Economics. Kuwait and Qatar would suffer the biggest blows because of their outsize energy industries.

 

The conflict also has shaken the Gulf's carefully cultivated image as a stable sanctuary. That threatens ambitious economic overhauls like Saudi Arabia's Vision 2030, which relies on foreign investment. Meanwhile, Middle Eastern tourism likely will suffer. International visitors could drop as much as 27% this year, says research firm Tourism Economics, costing up to $56 billion in lost revenue.

 

Contagion has spread across the wider region: This week, Egypt's pound crashed to a low against the dollar on concerns that more expensive energy imports will strain fragile government finances.

 

A prolonged period of higher energy prices could derail Europe's nascent economic recovery. The European Union relies on fossil-fuel imports for about 58% of its energy. Among major economies, only South Korea and Japan are more dependent on fossil-fuel imports.

 

While most European countries don't buy much energy from the Middle East, they are exposed to rising global prices. Dwindling supply from the Gulf has sparked a bidding war for what is left elsewhere, sending European gas prices up more than 50% this month.

 

The impact of higher energy prices on eurozone inflation could be three times as large as in the U.S., according to Oxford Economics' forecasts. Italy faces one of the largest price increases in part because of its higher dependence on Qatari liquefied natural gas.

 

China is the world's largest oil importer, but has spent years building up defenses against energy shocks. The country has more than a billion barrels of oil in strategic reserves, according to estimates, enough to last for months. It also has invested heavily in renewable energy and subsidized electric vehicles and has a large domestic coal industry it can tap.

 

Japan and South Korea rely more on oil from the Middle East, but also have large stockpiles. Many Asian economies also depend on LNG from the Middle East, which is harder to store and could run out sooner.

 

Some countries are preserving supplies and shielding households. South Korea and Thailand have capped some domestic fuel prices. The Philippines told government offices to turn off computers at lunch and set air conditioning to no lower than 75 degrees Fahrenheit.

 

The Iran conflict has thrown Moscow an unexpected economic lifeline.

 

Before the war, Russia was struggling to sell its oil because of sanctions. The Gulf disruption promises to spur new demand for its crude, potentially strengthening Moscow's hand in relations with China, India and other major importers.

 

Higher energy prices also should bolster growth in oil-rich countries such as Canada, Brazil and Venezuela, which is slowly increasing production. Still, economists expect countries to see a small rise in inflation as higher global energy prices raise gas and airfares.” [1]

 

1. World News: War Has Economic Winners, Losers --- Wild swings in oil and natural-gas prices reverberate across the globe. Dulaney, Chelsey; Kantchev, Georgi.  Wall Street Journal, Eastern edition; New York, N.Y.. 12 Mar 2026: A6.