US-Iran Conflict Sends Global Economy into Free Fall
The ongoing US-Iran conflict has far-reaching consequences beyond their borders, affecting global energy trade and economic growth. The situation began in March when a prolonged conflict broke out after the US attack on Iran, escalating tensions in the Strait of Hormuz, a critical waterway for global energy trade. Global crude oil prices have surged above $100 per barrel, with Brent crude reaching $93.98 per barrel on August 21.
This energy crisis has led to sharp increases in petrol and diesel prices globally, particularly in countries reliant on imports such as India, Pakistan, Bangladesh, and Japan. India's crude oil basket rose to $93.45 per barrel on August 19, while Brent crude reached a record high of $93.98 per barrel on August 21.
The Strait of Hormuz blockade has disrupted global trade, with the US-Iran war causing a significant shock for the world economy. The Global Peace Index 2026 estimates that the conflict and energy crisis could result in a staggering $2.2 trillion loss to the global GDP in a single year.
Japan's yen fell to nearly 164 against the dollar, hitting a 40-year low due to high crude oil prices and supply disruptions. The country's actions in supporting the yen have raised concerns over its holdings of US Treasury securities, potentially creating a domino effect across global economies.