Governments Scramble to Limit Fallout of Iran War as Oil Prices Surge

 A worker fills up a car at a gas station as oil prices are expected to increase amid the US-Israel conflict with Iran, in Quezon City, Metro Manila, Philippines, March 9, 2026. (Reuters)
A worker fills up a car at a gas station as oil prices are expected to increase amid the US-Israel conflict with Iran, in Quezon City, Metro Manila, Philippines, March 9, 2026. (Reuters)
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Governments Scramble to Limit Fallout of Iran War as Oil Prices Surge

 A worker fills up a car at a gas station as oil prices are expected to increase amid the US-Israel conflict with Iran, in Quezon City, Metro Manila, Philippines, March 9, 2026. (Reuters)
A worker fills up a car at a gas station as oil prices are expected to increase amid the US-Israel conflict with Iran, in Quezon City, Metro Manila, Philippines, March 9, 2026. (Reuters)

Governments scrambled to limit the impact on economies and consumers from the widening Iran war, which fueled a record surge in oil prices on Monday after key producers cut output and Tehran signaled that hardliners would remain in charge.

In a sign of mounting governmental concern over supply disruptions, the Group of Seven finance ministers will discuss the possibility of a joint release of emergency oil reserves in a meeting on Monday, a French government source said.

In South Korea, which buys 70% of its oil from the Middle East, President Lee Jae Myung said Seoul would cap fuel prices for the first time in nearly 30 years and he warned against panic buying.

Speaking at an ‌emergency meeting, Lee ‌called the crisis "a significant burden on our economy, which is highly dependent ‌on global ⁠trade and energy ⁠imports from the Middle East."

A senior Japanese member of Parliament on Sunday said the government had instructed a national oil reserve storage site to prepare for a possible crude release, although the country's chief cabinet secretary later said no decision had been made to release stockpiles.

Japan imports around 95% of its oil from the Middle East. It has reserves to cover 354 days of consumption.

Elsewhere, Vietnam removed import tariffs on fuels and Bangladesh shut universities to conserve electricity and fuel, while China last week asked refiners to halt fuel exports and try to cancel shipments that ⁠were already committed.

TRUMP DOWNPLAYS US PRICE SURGE

President Donald Trump tried to downplay ‌concerns about rising US gasoline prices, which were up 11% for ‌the week on Friday, while Senate Minority Leader Chuck Schumer called on him to sell oil from the Strategic Petroleum ‌Reserve.

"Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is ‌over, is a very small price to pay for U.S.A., and World, Safety and Peace," Trump posted on Truth Social on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"

Oil jumped 25%, with Brent on track for a record one-day gain, while OPEC producers Kuwait and Iraq cut output over the weekend as the crucial Strait of Hormuz remained effectively shut.

BRENT JUMPS 25% ON ‌SUPPLY FEARS

Across Asia, which sources 60% of its oil from the Middle East, equities slid and the dollar rose as worries grew that the disruption ⁠in energy supplies could ⁠be prolonged.

Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, a move that is expected to draw Trump's ire. Weekend attacks on Iranian oil storage facilities fueled fears of retaliatory strikes on energy facilities.

In Bahrain, Bapco Energies declared force majeure on Monday following an attack on its refinery complex, the company said.

"Oil prices have now gathered all the ingredients for a perfect storm - Middle East Gulf producers cutting output, the prolonged closure of the Strait of Hormuz ... all compounded by a growing pessimism about a quick turnaround in the current situation," said Kpler senior oil analyst Muyu Xu.

Iraq cut oil production at its main southern oilfields by 70% to 1.3 million barrels per day, three industry sources said on Sunday, while Kuwait Petroleum Corp began cutting oil output on Saturday and declared force majeure. No. 2 LNG exporter Qatar has already halted exports of the superchilled fuel.



Global Economy Faces Fresh Supply Shock as Hormuz Crisis Escalates

 A ship crosses the Strait of Hormuz off Oman’s Musandam governorate on April 12. REUTERS
A ship crosses the Strait of Hormuz off Oman’s Musandam governorate on April 12. REUTERS
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Global Economy Faces Fresh Supply Shock as Hormuz Crisis Escalates

 A ship crosses the Strait of Hormuz off Oman’s Musandam governorate on April 12. REUTERS
A ship crosses the Strait of Hormuz off Oman’s Musandam governorate on April 12. REUTERS

A fresh escalation in US-Iranian tensions has plunged global trade and financial markets back into deep uncertainty, threatening to slow economic growth and drive shipping and marine insurance costs to record highs.

With the conflict hanging over vital sea lanes, the global economy is also grappling with mounting structural strain.

Strategic oil reserves are lower, while investors are increasingly reluctant to commit to long-term plans, leaving markets exposed to the sharpest supply shock since the start of the year.

Fadl bin Saad al-Buainain, a member of Saudi Arabia’s Shura Council, said the renewed tensions were gathering force like a “snowball,” with the risks growing steadily.

He said rising uncertainty would weigh particularly heavily on regional economies, disrupting foreign investment flows and undermining government spending on development projects.

Al-Buainain said any direct confrontation would hit critical sectors immediately.

Energy supplies could be disrupted by the closure of the Strait of Hormuz or attacks on oil facilities, sending prices sharply higher.

Major shipping routes could be cut, paralyzing supply chains. Government budgets would also come under pressure, especially in countries without alternative routes for crude exports, threatening both revenues and imports.

He warned against allowing the political deadlock to drag on and urged the activation of serious diplomatic channels.

Without genuine diplomacy, he said, proposed negotiations and agreements risk becoming little more than a means of buying time and preparing for a wider military confrontation.

Al-Buainain also called on the international community, through the United Nations and the Security Council, to adopt a clear resolution guaranteeing freedom of navigation in the Strait of Hormuz.

He said an international force should be formed to protect oil tankers and cargo vessels from continued Iranian threats to civilian assets and economic facilities.

Economy caught in the ‘Hormuz vise’

Abdulrahman Baeshen, head of the Al-Shorouq Center for Economic Studies in Jazan, said recent US statements that memorandums of understanding with Tehran were no longer in effect, combined with renewed strikes on Iranian ports and cities, had piled further pressure on global markets already under strain for months.

The impact was immediate, with oil prices rising by more than $4 a barrel.

Baeshen warned that the continued militarization or closure of the Strait of Hormuz would deliver a series of severe shocks to the global economy.

Energy, food, agriculture, pesticides and fertilizers would be among the first sectors hit, he said.

He said a return to economic stability and market certainty depended on the parties resuming serious negotiations and halting reciprocal attacks, allowing the strategic waterway to reopen and shipping to resume safely.

Supply shocks return as recovery falters

Khaled Ramadan, head of the International Center for Strategic Studies in Cairo, said renewed military conflict around the Strait of Hormuz threatened to revive the supply shock that hit the world in early 2026.

He said the escalation could push crude prices close to $100 a barrel in the near term, disrupt petrochemical and food supplies and trigger a renewed surge in energy inflation.

The global economy had only begun to recover from the spring crisis, Ramadan said, but was now entering another period of instability.

The risks are greater because major economies have already drawn down part of their strategic petroleum reserves, he added.

Ramadan said the sectors most at risk were:

Shipping and maritime transport: Hit by record bunker fuel prices and soaring war-risk insurance costs.

Agriculture and fertilizers: Pressured by an expected rise in natural gas prices, raising the risk of a global food crisis that would hit developing countries hardest.

Heavy and energy-intensive industries: Including aluminum, steel, cement and chemicals.

Aviation and tourism: Exposed to higher jet fuel prices and rising airfares.

Options for confronting the crisis

Ramadan said the deep imbalances caused by tensions in the Strait of Hormuz required a two-track response to the cumulative strain.

The first track would focus on urgent action.

That would include immediately activating alternative pipelines, such as Saudi Arabia’s East-West pipeline and pipelines in the United Arab Emirates, increasing production from independent producers including the United States, Brazil and Canada, and redirecting trade through alternative logistics networks.

The second track would focus on longer-term structural measures.

These would include accelerating energy diversification, building larger strategic reserves capable of absorbing prolonged shocks and creating strong regional energy alliances linking Gulf producers with consumers in fast-growing Asian markets.


Saudi Inflation Holds Firm Despite Energy Shock

Riyadh’s commercial Tahlia Street. (AFP)
Riyadh’s commercial Tahlia Street. (AFP)
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Saudi Inflation Holds Firm Despite Energy Shock

Riyadh’s commercial Tahlia Street. (AFP)
Riyadh’s commercial Tahlia Street. (AFP)

Saudi Arabia’s inflation rate held steady at 1.8% in June, underscoring the economy’s price stability as renewed conflict in the Middle East raises fears of higher energy costs and a fresh wave of global inflation.

The reading, released by the General Authority for Statistics on Wednesday, kept the Kingdom among the G20 economies with the lowest inflation rates and broadly aligned with Saudi government and International Monetary Fund forecasts.

The data showed that the Saudi economy entered the latest period of global volatility from a relatively strong position, with inflation remaining subdued despite uncertainty across energy and financial markets.

The June figures preceded renewed turbulence in global oil markets after the war in the Middle East resumed, pushing crude prices higher and raising concerns that energy costs could feed into consumer prices elsewhere.

For Saudi Arabia, stable inflation provides a buffer against any price pressures that may emerge in the coming months.

Housing remained the main driver of inflation. Prices for housing, water, electricity, gas and other fuels rose 3.5% from a year earlier, led by a 4.4% increase in actual housing rents. The rise reflected stronger demand in major cities and rapid urban expansion linked to the Kingdom’s large development projects.

Transport prices increased 1.7%, while food and beverage prices rose 1.4%. Declines in several other categories helped contain the overall rate.

Prices for personal care, social protection and miscellaneous goods and services rose 3.8%, driven by a 14.7% jump in jewelry and watch prices amid record increases in global gold and precious-metal prices.

Recreation, sports and culture prices climbed 2.5%, reflecting a 4.2% increase in the cost of holiday packages and tourist trips.

By contrast, prices for furnishings, household equipment and routine household maintenance fell 0.6%, while clothing and footwear prices declined 0.4% year on year. The falls helped offset inflation in housing and other services and reflected continued competition across consumer markets.

Monthly rise remains modest

On a monthly basis, consumer prices rose 0.2% in June from May 2026.

Food and beverage prices increased 0.7%, driven by a rise of the same rate in food prices.

Housing, electricity and gas prices edged up 0.1%, while transport costs rose 0.4%.

Prices for personal care and social protection fell 1.0% from the previous month. Restaurant and accommodation services declined 0.1%, while communication prices also slipped 0.1%.

Among the G20’s lowest

Saudi Arabia's inflation remained below the levels recorded in several major economies.

Inflation stood at 3.5% in the United States in June, around 3% in Britain and close to 2% in the eurozone. Some emerging economies continued to post much higher rates.

That left Saudi Arabia among the least inflationary economies in the G20, even as it pressed ahead with large-scale investment and development programs.

The Kingdom’s inflation rate also remained below the average for advanced economies and well below that of emerging and developing markets, where food, energy and currency pressures have been more pronounced.

The figures point to Saudi Arabia’s ability to maintain price stability while expanding investment and implementing major development projects.

That contrasts with economies where stronger spending or higher energy costs have translated into faster inflation.

Official forecasts

The June reading was consistent with Saudi Finance Ministry forecasts for average inflation of about 2% in 2026.

It also aligned with IMF estimates issued in May and June, which projected that average inflation in Saudi Arabia would fall below 2% this year.

The IMF attributed the outlook to the strength of the Kingdom’s economic fundamentals and the effectiveness of domestic policies in containing inflationary pressures.

The fund expects global inflation to average 4.7% in 2026, up from 4.1% in 2025, before easing to 3.9% in 2027.

Those projections reflect continued pressure from tensions in the Middle East and higher energy prices. Saudi inflation, by comparison, is expected to remain below half the projected global average.

Why inflation has stayed low

Economists attribute the Kingdom’s low inflation to resilient economic fundamentals, effective monetary and fiscal policies, improved supply-chain efficiency and government measures aimed at maintaining adequate supplies of goods and services.

Rapid growth in non-oil activities and increased investment under Vision 2030 have also strengthened the economy’s ability to absorb external shocks without a significant pass-through to consumer prices.

Stable inflation helps preserve household purchasing power, but its effects extend further. It supports investor confidence, gives businesses greater visibility over future costs and reduces uncertainty around investment and consumption decisions.

Analysts said moderate inflation also gives policymakers more room to support economic growth as global markets brace for the impact of higher energy prices.

They expect the effect of those pressures on Saudi consumer prices to be more limited than in many other economies.

More certainty for businesses

Hisham Abu Jamea, chief adviser at Naif Al Rajhi Company, said stable inflation was a positive sign for prices and purchasing power and reinforced Saudi Arabia’s position among the G20 economies with the lowest inflation rates.

“Stable inflation provides a more predictable environment for individuals and the business sector and gives decision-makers greater room to focus on supporting economic growth,” he told Asharq Al-Awsat.

Abu Jamea said Saudi Arabia had managed to keep inflation below 2% despite global disruptions and economic challenges.

Housing remained the main source of pressure because of its large weighting in the consumer price index, he added.

However, recent government initiatives in the real estate sector were expected to ease price pressures and help bring inflation down, he stressed.

Growth without sharp price increases

Salem Baajajah, a professor of economics at King Abdulaziz University, said the 1.8% reading showed that economic growth in Saudi Arabia was no longer necessarily accompanied by sharp price increases.

He described that as an important shift from the experience of many global economies in recent years.

Maintaining inflation at its current level gives policymakers more room to proceed with major projects and economic diversification programs without allowing higher prices to undermine consumption or investment, he told Asharq Al-Awsat.

“The most important indicator is not merely that inflation remains low, but the quality of that stability,” Baajajah said.

“If it is supported by increased domestic production, broader competition and improved supply-chain efficiency, it becomes sustainable rather than temporary,” he remarked.

“The challenge in the next stage will not be to push inflation even lower, but to keep it within a moderate range that is consistent with an economy growing rapidly and attracting substantial investment,” he added.


Gold Retreats as Oil Rises and Inflation Fears Grow

Gold bangles on display at a jewelry shop in Varanasi, India (AFP)
Gold bangles on display at a jewelry shop in Varanasi, India (AFP)
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Gold Retreats as Oil Rises and Inflation Fears Grow

Gold bangles on display at a jewelry shop in Varanasi, India (AFP)
Gold bangles on display at a jewelry shop in Varanasi, India (AFP)

Gold prices slipped on Wednesday as escalating tensions in the Middle East continued to stoke inflation concerns, reinforcing expectations of higher US interest rates.

Spot gold fell 0.7% to $4,027.49 per ounce by 0843 GMT. Prices rose over 2% to a session high of $4,100.19 per ounce on Tuesday after soft US inflation data, Reuters reported.
US gold futures for August delivery slid 0.9% to $4,034.00.

Iran's Revolutionary Guard Corps threatened ⁠to close all possible ⁠export corridors benefiting Washington, after Tehran shut the Strait of Hormuz and the US reimposed a naval blockade of Iranian ports. Oil edged higher after closing at a one-month high on Tuesday.

"Higher US crude, gasoline and diesel prices will result in high inflation numbers in ⁠the next print in August, that could keep the tone of some Fed officials on the hawkish side, which is not helping gold," said UBS analyst Giovanni Staunovo.

"In the near-term oil and US gasoline prices will continue to influence gold, as it remains a key driver of US inflation," Staunovo added.

Higher interest rates tend to weigh on gold, as they increase the opportunity cost of holding the non-yielding asset.

Fed Chair Kevin Warsh told ⁠lawmakers ⁠on Tuesday the central bank had "no tolerance for persistently elevated inflation," hinting that the CPI data was not all swell.

Traders are pricing in about a 59% chance of a rate hike in September, according to the CME FedWatch Tool.

Investors now await the US Producer Price Index data due at 1230 GMT today for insights into inflation levels and the monetary policy outlook.

Among other metals, spot silver dipped 0.5% to $58.314 per ounce and platinum gained 0.2% to $1,634.36.

Palladium rose 0.8% to $1,315.05, after gaining 5% in the previous session.