Middle East conflict squeezes oil supplies, rattles markets worldwide

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The conflict in the Middle East is intensifying risks to the global economy, as energy prices surge and financial markets come under pressure.

Oil and natural gas exports from the region have been severely disrupted following an effective shutdown of the Strait of Hormuz, a vital shipping route that normally carries about one-fifth of the world’s daily oil and liquefied natural gas flows.

Iran has vowed to target vessels attempting to pass through the waterway and has also carried out attacks on energy infrastructure across the region, forcing several producers to halt output and raising fears that global supplies could be sharply reduced.

Markets have already begun to react. In the United States, gasoline prices recorded their biggest single-day rise since 2005, while Asian stock markets slid in early trading on Wednesday, reflecting concerns in countries that depend heavily on crude oil and gas imports from Gulf producers.

Economists warn that a prolonged conflict could drive up inflation and slow global economic growth.

The impact is already being felt in parts of Asia. In Myanmar, the ruling military authorities announced a fuel-rationing system, restricting the use of private vehicles based on odd and even number plates, according to Reuters.

In Thailand, authorities have urged the public not to panic-buy fuel and have encouraged government employees to work from home in an effort to conserve supplies.

US President Donald Trump sought to reassure markets on Tuesday, announcing government insurance and guarantees for commercial vessels transiting the Gulf and saying the US Navy could escort tankers through the strait if required.

However, the United Nations has warned that prolonged disruption could trigger a wider humanitarian crisis in the region. The UN’s humanitarian chief, Tom Fletcher, said food prices could surge, health systems could come under severe strain and basic supplies could become scarce in countries heavily dependent on imports.