The price of key oil benchmarks had already posted their highest weekly gains in six years by the time markets opened on 9 March 2026 – when they soared to more than US$115 a barrel. This has surpassed $100 for the first time since Russia’s 2022 invasion of Ukraine. The West Texas Intermediate (WTI) benchmark price for US crude is now nearly double its January level of about $60 a barrel.
Oil
production cuts across the Middle East in recent days have exacerbated fears of
a supply shortage. Gas and fertiliser supplies have also been hit, driving up
costs and increasing the risk of a significant global energy price spike,
adding to inflation and slowing economic activity.
Source: https://en.wikipedia.org
The US war on Iran is widely expected to boost inflation across the world, with a sustained rise in oil prices rippling through the wider economy. US inflation will surge to 3.7% if oil prices hold at $100 a barrel. Americans filling up their cars can already feel the impact: US fuel prices rose 25 cents over the week, and picked up another 25 cents over the weekend, averaging $3.44 a gallon. Higher fuel costs drain workers’ wallets and add to business costs in other ways, pushing up the price of goods from food to furniture.
Inflation is also set to pick up across the UK and eurozone if higher oil prices persist, according to Oxford Economics. Europe, which imports the vast majority of its oil and gas, saw natural gas prices rise nearly 67% in the war’s first week, according to analysts at ANZ Bank. China’s producer prices will meanwhile rise 0.4 percentage points if oil prices stay high, ANZ Bank has projected. In Australia, inflation is set to approach 5% – close to 1 percentage point higher than pre-war predictions – economists say. Petrol prices could rise by a dollar a litre, Westpac economists warned, with costs already A$0.20 a litre higher than in February.
Oil price spikes are “stagflationary”: they slow down, or stagnate, economic activity, raising the risk of recession, while adding to inflation. World economic growth would weather a 10% lift in energy prices, according to the International Monetary Fund, but slow from about 3.2% to 3%. The UK and the euro area would each grow by just 1% or less, if the conflict persists, economists predict.
Asian economies have enjoyed strong growth in industrial production, powered by the global tech boom, but an energy shock could disrupt that momentum, risking stagflation, Oxford Economics has warned. In the US, oil prices of $125 a barrel could cut gross domestic product by 0.8% even as inflation surpasses 4%, according to RSM, a middle-market assurance, tax and consulting firm. The oil shock resembles those seen in the 1970s.
The world is likely to face slower growth and higher prices, even if Trump ends the war, because oil prices will not return to their lows of January. Traders will charge a premium to cover the risk of a renewed “on-again, off-again” conflict. Countries across Asia, which is particularly reliant on oil from the Middle East, are already scrambling to mitigate the impact of the extraordinary rise in prices.
A quick de-escalation would help the world avoid an inflation spiral, as oil prices would stabilise, according to the National Australia Bank’s chief economist, Sally Auld. While she said it seemed unlikely the conflict would endure for another month, if it did, there would be “material risk of global recession” and oil prices could hold near US$120 a barrel. A month-long disruption could even see prices surpass the all-time record high of US$145 a barrel, Goldman Sachs has estimated. Three months of disruption would see prices rise to US$185 per barrel, with severe consequences for the global economy, Westpac economists predict.
Nothing bodes well for
this U.S. President. Only when markets crash and inflation rises in the U.S.
will he stop this man-made crisis. There is no endgame or outcome or Plan B! If
he is keen to have a regime change – then change North Korea, China, Russia and
a whole host of African and Latin American leaders. Will he do that? No!
Reference:
Why has the Iran war sparked fears of
stagflation for the global economy? Luca
Ittimani,
9 March 2026
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