The Middle East conflict is driving oil above USD 100, triggering inflation fears and raising the risk of stagflation in already‑weak economies such as the UK and Japan. The UK faces stagnant growth, high energy bills and limited policy room, with debates over freezing fuel duty and managing energy-price caps. Japan, heavily dependent on Middle Eastern crude, is taking swift action by tapping strategic reserves and subsidising domestic fuel prices, although it enters the crisis from a relatively stronger economic position.
Attempts by the US to form a naval coalition have faltered. As Iran steps up attacks on commercial shipping, flows remain well below 10% of normal levels, prompting forecasts of months of elevated pricing. The instability has become the largest supply shock in modern oil‑market history, with little clarity on when exports can recover.
India is racing to safeguard fertiliser supplies ahead of the vital kharif season by diversifying away from the Middle East, through which 70% of its urea imports typically pass. With heightened geopolitical risks threatening these routes, India is ramping up purchases from countries such as Russia, China, Morocco and Belarus.
India is also facing an acute LPG shortage as the effective closure of the Strait of Hormuz disrupts up to 90% of its supply. Households and businesses are experiencing delays, surging prices and rationing, prompting the government to ban LPG cylinder refills for homes with piped gas and to halt new connections.
The conflict has upended global supply chains and sharply pushed up container spot rates, particularly on Asia–Middle East and Asia–Europe routes, some of which have tripled. Added uncertainty stems from the Trump administration’s investigations into overcapacity and potential new tariff measures. With the conflict unresolved and policy risks escalating, the container market faces continued volatility through the rest of the year.