Middle East geopolitical developments and economic impact
Economic Bulletin
Week of 15 April 2026
This week, despite a fragile ceasefire, geopolitical tensions in the Middle East remain high, keeping markets unsettled. The supply shock is intensifying as the last pre-conflict oil shipments reach markets, shifting from delays to shortages. Refinery operations face pressure amid limited regional output. Gulf producers are boosting alternative export routes, though capacity remains limited. The IMF and World Bank warn of the economic fallout, forecasting slower global growth and higher inflation, including in the GCC, where some forecasts now suggest economic contractions in some economies. While the disruption is spreading beyond energy markets, notably affecting aviation and global trade, the human impact is also expected to be severe, with millions facing poverty risks due to rising energy and food costs.
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Strait of Hormuz restrictions: Recent targeted US naval blockade measures have further restricted the already minimal and tightly controlled traffic through the Strait of Hormuz, increasing shipping risks and operational uncertainty, and heightening the risk of broader trade and supply disruptions.
Prolonged energy disruption: While GCC energy infrastructure is beginning to stabilise and producers are expanding alternative export routes, recovery remains partial and capacity limited, so production gains do not immediately translate into restored export flows. Energy disruptions are intensifying as the final pre-conflict shipments reach key demand centres, shifting the impact from logistical delays to genuine shortages amid ongoing security and operational challenges, leading to upward pressure on global fuel prices.
Broader sectoral disruptions: The conflict continues to affect adjacent sectors, with aviation notably impacted as parts of Middle Eastern airspace remain restricted. European authorities have advised airlines to avoid certain routes, and industry bodies warn that network recovery will take time, adding strain to global trade and tourism and amplifying economic ripple effects beyond energy markets.
Rising human impact: The conflict’s disruption of fuel supply, fertilizer production, and transport costs is driving inflation and exacerbating food and energy insecurity, with the UNDP warning that up to 30 million people could be pushed into poverty, especially in vulnerable, import-dependent economies.
Weakening global outlook: Geopolitical tensions are driving downward revisions to global economic forecasts, with multilateral institutions such as the IMF and World Bank warning that the conflict poses a significant shock, and revised projections now indicating slower global GDP growth and higher inflation in 2026.
Regional economic slowdown: The GCC is forecast to experience slower economic growth than previous projections, with the IMF and World Bank revising down their 2026 forecasts. Saudi Arabia and the UAE are still expected to expand, albeit at a reduced pace compared to earlier forecasts, while Qatar’s economy is now projected to contract, reversing previous growth expectations.
