The International Monetary Fund (IMF) has warned that the Middle East conflict has generated the most severe disruption to global oil markets ever recorded, with cascading effects on inflation, food security and economic growth that will fall hardest on the world’s most vulnerable economies.
In a blog post published on March 30, 2026, by senior IMF economists, the Fund described the shock as global but deeply asymmetric, with the burden distributed unevenly across regions, income levels and the degree of fiscal resilience each country can draw on.
The de facto closure of the Strait of Hormuz and damage to regional infrastructure have produced the largest disruption to the global oil market in its history, according to the International Energy Agency (IEA). For fuel-importing economies, the effect amounts to a large, sudden tax on income.
With crude and oil product flows through the Strait of Hormuz plunging from around 20 million barrels per day before the war to a trickle, limited capacity available to bypass the waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 million barrels per day. Global oil supply is projected to plunge by 8 million barrels per day in March, partly offset by higher output from non-OPEC producers.
An Uneven Shock Across Regions
Energy-importing economies in Africa, the Middle East and Latin America are feeling the strain from higher import bills on top of already limited fiscal space and external buffers. In Asia’s large manufacturing economies, higher fuel and power bills are raising production costs and squeezing purchasing power, with balance-of-payments pressures already weighing on some currencies. In Europe, the shock is reviving the spectre of the 2021 to 2022 gas crisis, with countries such as Italy and the United Kingdom especially exposed by their reliance on gas-fired power, while France and Spain are relatively protected by their greater nuclear and renewables capacity.
Oil-exporting nations stand to benefit from higher prices, though the IMF cautioned that producers facing logistical constraints may see limited upside, and that elevated geopolitical risk and higher insurance costs are expected to dampen investment and longer-term growth even for exporters.
Supply Chain Disruption Beyond Energy
The conflict is reshaping global supply chains in ways that extend well beyond oil. The disruption of transit via the Strait of Hormuz has reduced liquefied natural gas (LNG) supplies from Qatar and the United Arab Emirates by over 300 million cubic metres per day, translating into a loss of more than two billion cubic metres of gas supply every week. The Ras Laffan facility in Qatar, the largest liquefaction facility in the world, has been offline since it was attacked on March 2.
Rerouting of tankers and container ships is increasing freight and insurance costs while extending delivery times. Urea prices have increased by 50 percent since the start of the war as of late March 2026, and the LNG disruption is also impacting the production of fertilizer, with implications for the agriculture industry in the Northern Hemisphere.
Around a third of global seaborne methanol trade also passes through the Strait of Hormuz, with disruption tightening the supply of a key chemical feedstock for resins, coatings and plastics, with knock-on effects across chemical value chains.
Food Security at Risk
The IMF singled out food security as one of the most acute concerns arising from the crisis, particularly for low-income countries. With shipments of fertilizer, of which about one-third passes through the Strait of Hormuz, disrupted, concerns about food prices are mounting. The interruption of crop-nutrient supplies from the Gulf comes just as planting season begins in the Northern Hemisphere, threatening yields and harvests through the year and pushing food prices higher.
People in low-income countries are most at risk when prices rise because food accounts for about 36 percent of consumption on average, compared with 20 percent in emerging market economies and 9 percent in advanced economies. That makes any spike in fertiliser and food prices not just an economic problem but a socio-political one, especially where fiscal resources to cushion the blow are limited.
Industrial and High-Tech Supply Chains Under Strain
The Strait of Hormuz crisis is disrupting key non-oil commodities including methanol, aluminium, sulfur and graphite, impacting global manufacturing and the green energy transition. Disruptions to these industrial essentials are rapidly reshaping global supply chains, from fertilizers for future harvests to minerals driving high-tech industries.
The Gulf is also a major supplier of helium, a critical input for semiconductor production and medical equipment. Separately, countries such as Indonesia could face shortages of sulfur needed for nickel processing, with potential implications for electric vehicle battery manufacturing.
All Roads Lead to Higher Prices and Slower Growth
Senior IMF economists asserted that while the war could shape the global economy through different channels, all roads lead to higher prices and slower growth, with the duration and scope of the conflict and the extent of infrastructure damage being key determinants of the ultimate impact.
The Fund said it will provide a comprehensive assessment of the economic impact in its World Economic Outlook report, scheduled for April 14, during the IMF and World Bank Spring Meetings in Washington.
In sub-Saharan Africa and some low-income economies in the Middle East and South Asia, already limited reserves and restricted market access make external shocks to financing conditions particularly dangerous, especially as higher import bills for fuel, fertilizer and food widen trade deficits and put pressure on currencies.
