Why has the Iran war sparked fears of stagflation for the global economy?

A crude oil tanker is guided to a berth at the oil terminal at the port in Qingdao, China. Asian markets suffered early on Monday as the war in the Middle East propelled oil price rises and rattled stock markets around the world. Photograph: AFP/Getty Images

Oil prices surged on Monday, triggering a stark sell-off across some of the world’s leading stock markets amid growing concern that the US-Israel war on Iran could set the stage for a global economic shock.

While they fell back on Tuesday after Donald Trump suggested the Middle East conflict could end “very soon”, oil continues to trade at high levels.