Global financial markets are increasingly being forced to reckon with the economic consequences of a prolonged energy disruption stemming from the war in Iran, as the closure of shipping through the Strait of Hormuz continues to tighten global oil supply and drive inflation higher.
Oil prices have surged to their highest levels in four years, with Brent crude briefly crossing $120 per barrel on Wednesday amid concerns that the disruption could extend well into the year. The ongoing closure of the Strait of Hormuz has created what is now the most significant sustained shock to global energy flows in decades, raising the risk of slower global growth alongside persistent inflation, Reuters detailed. The outlet also noted that the probability of recession in energy-importing regions such as Europe and parts of Asia is rising as markets struggle to price in the duration of the disruption.
