As tensions escalate between Israel and Iran, energy executives and analysts are sounding the alarm over the potential for severe global economic repercussions, particularly if the Strait of Hormuz, through which nearly 20% of the world’s oil supply flows, is blocked.

Shell CEO Wael Sawan, who spoke to The Guardian, has warned of a “huge impact on trade”  should the conflict worsen, citing the strategic vulnerability of the Strait of Hormuz. Almeida, L. (2025). 

Speaking to CNBC alongside the chief executives of TotalEnergies and EnQuest, Sawan emphasized the critical nature of energy infrastructure in maintaining global supply chains. All three leaders highlighted that continued attacks on vital energy assets could significantly disrupt oil flows, trigger price shocks, and destabilize markets worldwide.  Meredith, S. (2025)

The correlation between oil and broader energy costs remains a pressing concern. As wholesale oil prices rise, consumers face immediate consequences at the pump. Hooker, L. (2025).

However, the impact runs deeper: elevated energy costs translate into higher production and transportation expenses, which ultimately feed through to shelf prices, raising the cost of essential goods and services globally.

David Oxley, an economist at Capital Economics, drew a parallel to the early days of the Ukraine conflict, telling the BBC, “Many will remember the shock to prices that followed the beginning of the Ukraine conflict. That was in large part a response to higher gas prices.” Hooker, L. (2025).

The current situation poses similar threats. Analysts predict that if oil prices climb back to, or beyond, the \$100 per barrel mark, inflation could spike by an additional 1% across advanced economies. According to Capital Economics, this would present a significant challenge for central banks already struggling to rein in inflation and lower interest rates. Hooker, L. (2025).

With global energy prices poised to rise further, concerns are mounting over worsening living conditions, especially in developing nations. As access to affordable fuel and food tightens, the economic strain could deepen, raising fears of a broader humanitarian impact.

Policymakers and markets are now watching the Middle East with intense focus, hoping that diplomatic efforts can de-escalate the crisis before it inflicts lasting damage on the global economy.