Oil Price Surge Hits Global Economies as US-Iran Conflict Escalates

The ongoing US-Iran conflict has sent shockwaves across global economies, causing disruptions in energy supplies and shipping routes. This has led to a sharp rise in oil prices, with Brent crude moving back above $100 a barrel in September. The average Brent price in the first half of September was over 40% higher than its early-July low.

According to the International Monetary Fund's (IMF) July 2026 World Economic Outlook, global growth is projected at 3% in 2026, down from the 3.5% average recorded in 2024 and 2025. The IMF attributes this decline to the war-driven impact on energy importers and vulnerable economies.

Energy prices are having a direct hit on economies that rely heavily on imported oil and gas. India's crude import bill rose by 48.4% year-on-year to $74.8 billion during April-August, while Japan recorded a 1.1 trillion yen trade deficit in August, driven in part by a 58.7% increase in petroleum imports.

Higher energy costs are also feeding into inflation across economies. In the US, consumer inflation was 3.4% in August, unchanged from July, while India's retail inflation accelerated to 4.82% from 4.45% in July.