- ‘Difficult time’ for hauliers due to Iran conflict BBC
- Will petrol and diesel prices go up because of the Iran war? BBC
- Britain’s energy price-cap forecast to rise about 10%, Cornwall Insight says Reuters
- War in Middle East ‘could wipe out growth in UK living standards’ The Guardian
- How war in the Middle East could be felt in your utility bills AJC.com
Category: 3. Business
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'Difficult time' for hauliers due to Iran conflict – BBC
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Preparing for AI-Enabled Bioweapons – Gavi, the Vaccine Alliance
- Preparing for AI-Enabled Bioweapons Gavi, the Vaccine Alliance
- Intersection Of Biosecurity And AI Sees Seed-Stage Spike Crunchbase News
- AI can be a transformative health tool. It can also cause harm. Healthbeat
- ‘Agentic’ life sciences AI is exacerbating bioweapons concerns. Here’s what to do about it Bulletin of the Atomic Scientists
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Huawei Proposes Agent-Oriented Mobile Networks to Embrace Agentverse
[Barcelona, Spain, March 4, 2026] During MWC26 Barcelona, Eric Zhao, Vice President and Chief Marketing Officer of Huawei’s Wireless Solution delivered a keynote speech titled “Embracing the Agentverse, Unveiling the Agent-Oriented Network” at the Wireless Media & Analysts Roundtable. He stated: “Mobile AI is sparking a paradigm shift across the communications industry. With a trillion-scale surge in Agentverse connections on the horizon, mobile networks need an urgent upgrade. To unlock the full potential of 5G-A, the industry should accelerate end-to-end upgrades and innovation, building multidimensional network capabilities that can meet the demands ahead.”
Eric Zhao, Vice President & Chief Marketing Officer, Wireless Solution, Huawei
Agents Reshape Mobile Network Demands
Agents are rapidly evolving from personal assistants into engines of industrial automation and broad societal change, unlocking unprecedented economic value. On the consumer side, AI already generates more than 60% of online content, and AI shopping and AI-created video are becoming mainstream. In industries, “silicon-based productivity” agents are making fully automated manufacturing possible through autonomous learning and the precise coordination of thousands of robots. By 2030, the global market is expected to reach trillions of intelligent connections worldwide.
The rise of AI-driven networks is pushing requirements to a new level:
- Multi-directional bandwidth: Networks must evolve from today’s asymmetric uplink/downlink model to symmetric, high-bandwidth connectivity to enable smooth, real-time multimodal AI interactions.
- Deterministic reliability: Jitter must be minimized to avoid safety risks when embodied robots (VTLA) collaborate across modalities. This requires end-to-end high-reliability transmission and two-way interaction to ensure data integrity.
Building Agent-Oriented Mobile Networks to Unlock Network Potential
To meet these challenges, Huawei proposes agent-oriented networks:
- Agentic MBB Network: This Huawei’s new solution upgrades devices and algorithms. The industry’s first 256T U6GHz AAU delivers 1 Gbps downlink, 1 Tbps uplink, and ultra-low latency, while paving the way for 6G. Global intelligent coordination optimizes resources across time, frequency, and space to improve edge-user experience.
- Token Block Pipeline: A new AI-MOS experience standard maps multimodal demand to network KPIs. Huawei’s Token Block pipeline enables layered, modality-aware transmission for truly differentiated, deterministic experiences.
- A2A-T Intent Interface: This interface dedicated to the communications industry can translate business intent into network actions. While ensuring security, automated agent calls cut integration from months to days, enabling on-demand access to 5G-A capabilities.
Eric Zhao concluded: “We tend to overestimate the effect of a technology in a short run and underestimate the effect in the long run. With the mobile AI revolution and trillion-scale Agentverse connections ahead, even today’s vision may be conservative.” This is a structural shift that demands urgent action. Huawei calls on the global industry to collaborate, accelerate agent-oriented networking, fully unlock 5G-A potential, and embrace Agentverse.
MWC Barcelona 2026 will be held from March 2 to March 5 in Barcelona, Spain. During the event, Huawei will showcase its latest products and solutions at stand 1H50 in Fira Gran Via Hall 1.
The era of agentic networks is now approaching fast, and the commercial adoption of 5G-A at scale is gaining speed. Huawei is actively working with carriers and partners around the world to unleash the full potential of 5G-A and pave the way for the evolution to 6G. We are also creating AI-Centric Network solutions to enable intelligent services, networks, and network elements (NEs), speeding up the large-scale deployment of level-4 autonomous networks (AN L4), and using AI to upgrade our core business. Together with other industry players, we will create leading value-driven networks and AI computing backbones for a fully intelligent future.
For more information, please visit: https://carrier.huawei.com/en/minisite/events/mwc2026/
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Stock market today: Live updates
Traders work at the New York Stock Exchange on March 3, 2026.
NYSE
Stocks rose on Wednesday after a volatile previous session as investors eyed developments in the U.S.-Israeli war on Iran.
The Dow Jones Industrial Average added 180 points, or 0.4%. The S&P 500 traded up 0.3%, while the Nasdaq Composite moved 0.5% higher.
Treasury Secretary Scott Bessent told CNBC on Wednesday that the U.S. is going to make “a series of announcements” to support the flow of oil through the Persian Gulf. This comes after President Donald Trump said Tuesday that the U.S. will give insurance to tankers in the Gulf and have the U.S. Navy escort tankers through the Strait of Hormuz, if necessary.
The rally in oil prices that has taken place in the wake of the war in the Middle East lost steam Wednesday following Bessent’s comments. Brent crude oil futures dipped 0.7%, while West Texas Intermediate crude futures were lower by more than 1%. Both ended Tuesday’s trading off their session highs, up more than 4%.
Bessent also said Wednesday that Trump’s 15% global tariff announced late last month will be implemented this week. Yet, he added that he believes U.S. tariff rates would “within five months” return to levels prior to the Supreme Court’s decision to strike down the president’s tariff policy.
Trump said on Tuesday that the U.S. would provide risk insurance to all maritime trade through the Persian Gulf, in an effort to get tankers moving through the Strait of Hormuz. Tanker traffic through the Strait — the world’s most vital transit route for crude oil — came to a halt after the Iranian Revolutionary Guard commander threatened to set fire to ships attempting the route.
Meanwhile, Israel said it had launched another round of attacks on Tehran, with the country’s defense minister vowing to “crush” the Iranian regime’s capabilities.
“We are in the headline-watching business at the moment, with competing stories shifting market sentiment an hourly basis yesterday,” Deutsche Bank’s Jim Reid wrote in a Wednesday note. “From a market perspective, the main issue is that there’s no sign of either side de-escalating, and if anything it looks as though things are still ratcheting up.”
As U.S. futures pointed to a positive open on Wall Street, stocks listed in Europe also staged a recovery on Wednesday.
“Amid all the noise we might be seeing some opportunities start to emerge in markets for longer term investors, in our view, especially if we start to see energy prices stabilize and potentially moderate in days and weeks ahead,” said James McCann, senior economist at Edward Jones, in a note.
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Huawei Unveils SmartCare Intelligence Solution to Drive Experience Improvement and Revenue Growth
[Barcelona, Spain, March 4, 2026] During MWC Barcelona 2026, Huawei held an Intelligent CEM (SmartCare) Forum themed “Unleashing Value from Network Experience & Data to Drive Business Growth”, and launched the SmartCare Intelligence solution based on the industry’s first AI-Native architecture. This solution helps operators apply new AI technologies to high-value scenarios, creating new business value.
More than 100 industry guests and experts from renowned analysis organizations, TM Forum, and operators, had in-depth discussions on AI investment strategies and paths for large-scale application, and witnessed the launch of the new SmartCare Intelligence solution.
SmartCare Intelligence Solution Launch
Ding Chengyi, President of Network Performance and Converged Data Operations Domain unveiled the SmartCare Intelligence solution at the forum. This solution is based on an architecture featuring “1 unified AI entry + 2 key technology foundations + N scenario-based intelligent services”, introducing new capabilities such as domain-specific professional models and digital twins, enabling rapid closed-loop of production and operations processes, and achieving new business outcomes:
- 1 unified AI entry DataChat: Serving as the unified AI entry in the telecom CEM domain, DataChat integrates long-term memory capabilities with domain knowledge to proactively perceive the user, traffic, and experience status on the network. It can also call upon various intelligent agents and tools as needed for collaborative analysis, providing globally optimal solutions and recommendations, thereby creating an intelligent decision support entry with deep expertise in the telecom domain.
- 2 key technology foundations: By loading newly upgraded series of domain-specific professional models, such as the network digital twin and SRCON2.0 in the telecommunications field, the new solution will enable a “new work paradigm of experts + digital employees” to quickly close the loop on issues and generate business value.
- N scenario-based intelligent services: With the release of the new solution, four high-value scenarios were simultaneously launched—complaint management, network NPS improvement, high-value customer experience assurance, and hyper-personalized marketing. These scenarios focus on the most pressing pain points and challenges currently faced by customers, enabling seamless and efficient collaboration between domain experts and scenario-based AI agents, thereby helping operators quickly achieve a closed-loop of business value.
Ding Chengyi said, “The telecom industry is moving towards a new phase of fully intelligent operations. The SmartCare Intelligence solution will help operators quickly apply AI to high-value scenarios, accelerate the unleashing value from network experience and data, lead a new operational paradigm of business and network synergy, and drive new business growth.”
MWC Barcelona 2026 will be held from March 2 to March 5 in Barcelona, Spain. During the event, Huawei will showcase its latest products and solutions at stand 1H50 in Fira Gran Via Hall 1.
The era of agentic networks is now approaching fast, and the commercial adoption of 5G-A at scale is gaining speed. Huawei is actively working with carriers and partners around the world to unleash the full potential of 5G-A and pave the way for the evolution to 6G. We are also creating AI-Centric Network solutions to enable intelligent services, networks, and network elements (NEs), speeding up the large-scale deployment of level-4 autonomous networks (AN L4), and using AI to upgrade our core business. Together with other industry players, we will create leading value-driven networks and AI computing backbones for a fully intelligent future.
For more information, please visit: https://carrier.huawei.com/en/minisite/events/mwc2026/
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China achieves breakthrough in high-speed satellite-to-ground laser communication
China has successfully achieved a significant breakthrough by testing a laser communication link between a high-orbit satellite and the ground, achieving a two-day data transfer at 1 gigabit per second over a distance of more than 40,000 kilometres.
The primary objective of satellite-ground laser communication research focuses on two main areas: increasing downlink speeds to handle arguing data volumes in specific scenarios and improving long-term real-time communication capabilities in high-orbit environments. These advancements are crucial for space systems and cutting-edge interactive tools.
The successful collaboration between the Chinese Academy of Sciences Institute of Electronics and the Beijing University of Posts and Telecommunications forged a robust laser connection between an observatory in southwestern Yunnan Province and a geosynchronous satellite.
The recent development enables satellites not only to transmit data immediately but also to receive complex commands in real time, opening avenues for transforming high-orbit satellites from passive data relays into intelligent processing centers.
Recent experiments have confirmed the deep-space communication capabilities of ground stations. These technologies provide a mature engineering model set for future large-scale applications. Furthermore, laser communication offers up to 1,000 times the bandwidth of conventional systems, resolving data bottlenecks and achieving remarkable results for high-resolution remote sensing.
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HM Hospitals and Huawei Jointly Launch a Global Smart Healthcare Showcase-Huawei
[Barcelona, Spain, March 3, 2026] During MWC Barcelona 2026, Huawei held a summit themed “AI+, Accelerating Healthcare Intelligence.” The event gathered leading global healthcare experts, academics, and industry partners to envision the new future of digital and intelligent healthcare. At the summit, Huawei teamed up with HM Hospitals, Spain to officially launch the Global Smart Healthcare Showcase. Xavier Tarrago Bonfill, Digital Transformation Project Director of HM Hospitals, Spain, William Zhang, President of the Healthcare BU, Huawei, and Kai Zhang, Director of Healthcare Industry in Spain, Huawei unveiled the showcase together.
HM Hospitals, Spain and Huawei jointly launched the Global Smart Healthcare Showcase
Li Junfeng, Vice President of Huawei and CEO of the Global Public Sector BU, stated in his speech that as Huawei’s first smart healthcare showcase in Europe, HM Hospitals integrates China’s leading digital technologies with European healthcare expertise, providing a practical blueprint for the intelligent upgrade of the global healthcare industry.

Li Junfeng, Vice President of Huawei and CEO of the Global Public Sector BU, delivering his speech
Xavier Tarrago Bonfill, Digital Transformation Project Director of HM Hospitals, detailed the technical architecture and application achievements of the showcase in his keynote speech. By upgrading digital and intelligent infrastructure and introducing Huawei’s solutions such as Medical Technology Digitalization and Smart Hospital Campus, both parties are comprehensively advancing the construction of smart hospitals. In campus and ward management scenarios, Wi-Fi 7 and high-performance devices have been deployed, paired with 2.5GE wired access to meet clinical requirements for low latency and high bandwidth. The deployment of CloudCampus and the CampusInsight platform enables intelligent network O&M. In the medical technology field, the group strengthened its hospital information system (HIS) and picture archiving and communication system (PACS) with Huawei’s gateway-free, active-active, all-flash storage solution, ensuring seamless continuity of healthcare services. By further integrating a medical data lake built on scale-out storage, the group enabled automatic tiering of massive amounts of unstructured files. This not only addresses the ever-evolving needs of imaging and pathology systems, but also lays a high-speed digital foundation for smart diagnosis and treatment.

Xavier Tarrago Bonfill, Digital Transformation Project Director of HM Hospitals, delivering his speech
The Global Smart Healthcare Showcase that Huawei launched with HM Hospitals marks a milestone in the in-depth cooperation between the two parties. Both of them have fully leveraged their respective strengths to achieve resource sharing and mutual benefits, providing fresh insights for the global construction of smart healthcare. Looking ahead, Huawei will continue to lead through innovation, working hand-in-hand with global customers and partners to infuse intelligence into every hospital and co-author a new chapter of industry intelligence.
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South Korean stocks hit hardest by Iran war as market plunges 12%
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South Korean equities plunged 12 per cent on Wednesday in a record one-day drop, as the world’s best-performing market this year bore the brunt of a big sell-off in Asian markets over fears of a prolonged conflict in the Middle East.
The high-flying Kospi benchmark has fallen nearly 20 per cent since Friday after rising nearly 50 per cent in the first two months of this year. Investors fear the intensifying war in the Middle East could harm the world’s eighth-largest oil importer.
“Investors are trying to take profits from one of the best-performing markets year to date,” said Jason Lui, head of Asia-Pacific equities and derivatives strategy at BNP Paribas, noting that some were pricing in a “more severe disruption scenario”.
The heavy sell-off was driven by declines in market heavyweights Samsung Electronics and SK Hynix, the world’s two largest memory chipmakers, which account for nearly 40 per cent of the Kospi index. They have dropped about 20 per cent each since the war broke out.
Shares across east Asian economies that depend heavily on energy imports fell sharply on Tuesday as oil prices continued their rise.
Japan’s Topix fell 3.7 per cent, while Taiwan’s Taiex slumped 4.4 per cent. In China, the Hang Seng index and CSI 300 lost 2 per cent and 1.1 per cent respectively.
Brent crude climbed 2.5 per cent to $83.40 a barrel.
Foreign investors have sold a net Won5tn ($3.4bn) worth of Kospi shares so far this week. The Kospi 200 volatility index surged to the highest since March 2020.
The heavy foreign selling piled pressure on the Korean won, which slid 2.5 per cent over two days and briefly fell past Won1,500 to the dollar on Tuesday to its weakest level since the global financial crisis.
“Given that Korea is a big oil importer, higher oil prices will have a worrisome impact on the country’s macroeconomy including inflation, exchange rates and growth, if the war is not over in a week or two,” said Jongmin Shim, an equity strategist at CLSA.
He also blamed the heavy sell-off on the unwinding of leveraged stock purchases by retail investors, who had emerged as the main drivers of the rally this year.
The sharp fall has pushed many retail investors into panic mode.
“I’m having a meltdown. I’ve never seen a freefall like this in my decades of stock investing, even when a war broke out,” said Song Mi-kyung, a 60-year-old housewife. “There is not much I can do other than just wish for a quick recovery.”
The Bank of Korea said on Wednesday it would closely monitor the market to take measures in case of “excessive moves” in the currency.
Lawmakers from South Korea’s ruling party said they would meet the country’s top financial regulator on Thursday to discuss measures to stabilise the stock market.
Analysts fear further pressure on the won as Seoul has promised to invest $350bn in the US as part of its trade deal with Washington aimed at reducing high American tariffs.
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Global supply chains under pressure as Iran blocks Strait of Hormuz
The U.S. and Israeli campaign against Iran, which has already drawn the Gulf states, and even one European country, Cyprus, into a major geopolitical crisis, is fueling fears of inflationary shocks and potential damage to GDP.
Since the beginning of 2026, Brent crude has surged about 43%. In just the three days of the current conflict, prices jumped roughly 22%, surpassing $85 per barrel. Markets are now questioning whether we are facing a “Ukraine 2” scenario, energy prices soaring due to a regional war.
1 View gallery

A ship in the Strait of Hormuz.
(Photo: AFP PHOTO / HO / SEPAHNEWS)
Comparisons to 2022, when Brent reached $120 per barrel, require caution. At present, the baseline scenario is not a systemic collapse, but a supply shock whose impact depends heavily on the duration and intensity of the disruption, as well as on its transmission to other sectors. What is already clear is that this is not a technical event. Even if some effects are temporary, the supply shock has the potential to affect the short- to medium-term economic outlook.
The disruption is driven primarily by Iran’s control of the Strait of Hormuz, through which roughly one-fifth of global oil and gas passes daily. Tehran has threatened to target any vessel crossing the strait. In other words, the problem is not the absence of oil, but its ability to leave the Gulf region, disrupting supply chains worldwide.
The key question is not merely how much fuel prices will rise this month, but whether these increases will feed into core consumer and producer price indices, and from there into broader inflation expectations.
The transmission channel is clear: rising oil and gas prices quickly push up the cost of gasoline, diesel, electricity, and household gas, immediately affecting the consumer price index. These are essential inputs for industry, restaurants, hotels, and retail. Marine insurance premiums have also surged, up to 50%, according to an S&P report, greatly increasing transportation costs. Changes in shipping routes, canceled voyages, and extended delivery times are creating logistical bottlenecks. This is where the supply chain effect begins: raw materials, industrial components, and imported food are becoming more expensive, not just energy.
The next stage depends on the duration of the crisis. If the shock is brief, companies may absorb the costs through margin erosion. If it persists for weeks or months, prices will adjust upward, potentially affecting inflation expectations. When households and businesses believe prices will not only rise but remain elevated, behavior changes. This can trigger the heart of the inflationary spiral: wages. If workers demand higher pay to offset living costs, and these increases are not backed by productivity, a wage-price spiral can develop. Today, unlike the 1970s, wage indexation is weaker and less automatic, but the risk persists.
Returning to the “Ukraine 2” question, it should be noted that in 2022 Europe had just emerged from the pandemic, inflation was already high, and the continent was dependent on Russian gas, a rare combination of systemic supply shocks. Today, conditions are different: European inflation stands at 1.9% and has been declining since September 2025; global inventories are higher, the liquefied natural gas market is more flexible, and central banks maintain positive real interest rates. They are no longer behind the curve as in 2022.
The real risk today lies in the transition from a price shock to a flow shock. A prolonged closure of the Strait of Hormuz or damage to regional export infrastructure would create a quantitative supply shock, capable of penetrating more deeply into the core of inflation.
European policymakers are already responding to this tension. Philip Lane, chief economist at the European Central Bank, warned that a prolonged energy shock could have secondary effects, undermining progress toward the inflation target. Central banks can ignore one-off spikes, but sustained disruptions threaten to destabilize inflation expectations, a lesson from 2022. Even theoretically, renewed interest rate hikes in Europe amid such a supply shock are now a realistic, albeit undesirable, scenario. Tightening monetary policy during supply chain disruptions raises the risk of an economic slowdown.
Indeed, Europe is already experiencing a slowdown: GDP growth in Q4 2025 was 1.5% year-on-year, the second consecutive decline in growth rates. While this is not a recession, the economy is clearly decelerating. In the U.S., the dilemma is similar. The Federal Reserve must differentiate between a one-off shock and a structural shift in inflation, at a time when inflation shows signs of easing (2.4% in January) but remains above the 2% target.
Energy shocks also affect economic growth through three main channels. First, rising fuel and electricity costs act as a de facto regressive tax, disproportionately affecting low-income households. Second, firms with narrow profit margins face eroded profitability, leading some to reduce investment or delay hiring. Higher transportation and insurance costs further slow activity, especially in import-heavy industries. Third, the financial arena is impacted: geopolitical risk premiums raise yields, increase credit costs, induce capital market volatility, and weaken capital flows to emerging markets. Uncertainty alone also dampens economic activity.
Israel is relatively well-positioned. The decision by the Governor of the Bank of Israel to delay further interest rate cuts, despite public expectations and pressure from the Finance Minister, appears prudent in retrospect. When geopolitical uncertainty rises and risk premiums expand, preserving monetary flexibility is more important than immediate relief. Israel remains exposed to rising imported fuel costs and maritime transport prices; in such an environment, caution is essential.
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Middle East war pushes up oil prices, disturbing global economy-Xinhua
BEIJING, March 4 (Xinhua) — The global economy could be plunged into a dire situation as U.S.-Israel strikes on Iran, unfolding over the weekend, will deal a heavy blow to global energy supply, trade and equity market, analysts have warned.
MARKET LOSSES
Following the start of the strikes, major world stock markets were gripped by the escalating tensions in the Middle East, sending indices into negative territory.
In Asia, Japan’s Nikkei stock index briefly lost 3 percent on Wednesday morning, extending its losses, amid concern that the conflict could drag on, with the Strait of Hormuz, a key waterway for oil and gas transportation, effectively shut down.
South Korean stocks opened sharply lower on Wednesday, extending losses from the previous session’s 7 percent plunge. The country’s main bourse operator, the Korea Exchange, issued a sell-side sidecar for two consecutive days, suspending the selling of KOSPI futures.
In Europe, the DAX Index closed at 23,790.65 points, down 847.35 points, or 3.44 percent, on Tuesday. The FTSE 100 Index closed at 10484.13 points, down 295.98 points, or 2.75 percent, while the Paris CAC 40 closed at 8103.84 points, down 290.48 points, or 3.46 percent.
On the same day, U.S. key stock indices declined, with the S&P 500 Index closing at 6,816.63 points, down 64.99 points, or 0.94 percent, and the Nasdaq Composite Index closing at 22,516.69 points, down 232.17 points, or 1.02 percent. The Dow Jones Industrial Average closed at 48,501.27 points, down 403.51 points, or 0.83 percent.
SOARING OIL PRICES
What really matters for the market is oil — its implications for inflation and the broader world economy.
A senior Iranian military advisor said on Monday that the country’s armed forces will not let any oil be exported through the Strait of Hormuz.
Ebrahim Jabbari, an advisor to the chief commander of Iran’s Islamic Revolution Guards Corps (IRGC), made the remarks in an interview with state-run IRIB TV while warning that the country’s armed forces will take action against any movement by oil tankers through the Strait of Hormuz, a shipping route carrying one-fifth of oil consumed globally.
Earlier, Iranian media reported that the IRGC had closed the strait to shipping, declaring the vital oil and gas waterway unsafe due to U.S. and Israeli attacks.
“War in Iran could cause the biggest oil shock in years,” The Economist warned. The benchmark Brent crude oil contract gained 1.2 percent in early trading on Wednesday to 82.45 U.S. dollars per barrel, its highest since July 2024, and has gained 14 percent since Friday.
Also, a widening Middle East conflict looks set to create the most significant disruption for gas markets. Iran’s neighbors, including Qatar, are some of the world’s most important producers, and the region is also a vital supply route, with 20 percent of liquefied natural gas exports traveling through the strait, analysts said.
The U.S. think-tank Council on Foreign Relations said oil acts as a foundational feedstock, and disruptions will likely lead to high inflation and significant economic downturns.
“Escalating conflict in the Middle East, particularly involving Iran, poses a severe threat to global energy supplies. Disruptions in the Strait of Hormuz could cause major oil price spikes, significant inflation, and knock-on effects on the global economy,” it said.
Market traders said that oil prices will continue to hike if the war persists, with oil prices increasing 20 percent in case of a supply cut from Iran. If the strait is closed, oil prices will likely exceed 100 dollars per barrel, with India, Japan and European countries bearing the brunt.
In the euro area, traders priced a small chance of a European Central Bank rate hike this year, and Chief Economist Philip Lane said that a prolonged war in the Middle East could cause a substantial spike in eurozone inflation and reduce economic growth.
WORST SCENARIO
Capital Economics, a London-based macroeconomic research consultancy, expects that a prolonged conflict affecting supply could cause oil prices to jump to around 100 dollars, potentially adding 0.6-0.7 percentage points to global inflation.
According to Citigroup, a sustained 10-dollar-per-barrel oil shock could aggressively de-anchor inflation expectations across emerging markets, hitting countries with low foreign exchange reserves hardest. Argentina, Sri Lanka, Pakistan and Türkiye are most exposed to sudden capital outflows.
Türkiye is highly dependent on imported oil and natural gas, with any disruption or even the perception of disruption in supply routes expected to push prices upward, directly widening the current account deficit, Mustafa Sonmez, an Istanbul-based economist, told Xinhua.
An oil spike to 100 or 110 dollars per barrel would significantly increase Türkiye’s external financing need and exacerbate the country’s inflation rate, Sonmez said.
Senol Babuscu, a banking expert at Ankara’s Baskent University, said inflationary pressures could emerge through both direct and indirect channels.
“When households anticipate higher fuel and food prices, they adjust spending behavior, and businesses adjust pricing strategies,” Babuscu told Xinhua. “This can accelerate the inflationary cycle.”
They said that the overall impact on the economy would depend on the scope and duration of any confrontation.
The London-based ICIS (Independent Commodity Intelligence Services), a global provider of petrochemical, energy, and fertilizer market information, looked at three scenarios of the Iran crisis and their impact on the global economy.
In the best case, where the shock is contained, there will be a mild drag on global growth and a temporarily higher inflation, but the world economy will keep expanding.
In the medium case, which assumes persistent disruption and slower global growth, the global economy will weaken noticeably, with softer industrial output, higher inflation, and risk-averse financial markets, but still not a downturn on the scale of 2008 or 2020.
In the worst case, where there is a sustained chokepoint and infrastructure damage, a global recession is the central outcome, driven by high energy prices, supply chain breakdowns, and collapsing consumer spending.
For the U.S. economy, even though trade exposure to the Strait of Hormuz is limited, higher global oil prices would fuel the current cost-of-living crisis. U.S. consumers are already stretched, and gasoline prices are acutely politically sensitive going into midterm territory. Higher oil prices would also complicate the Federal Reserve’s future monetary policy path, ING Group said.
“Every 10-dollar-per-barrel sustained rise in oil prices can knock off 10 to 20 basis points of growth over the next 12 months,” said Ajay Rajadhyaksha at Barclays, adding that if oil stayed at 120 dollars, the United States and the world economy would take a considerable hit. ■
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