As of 3:00 EDT Wednesday, WTI crude dropped to $98.19 per barrel and Brent to $100.84. Both fell roughly 3% in a single day, after surging 40–50% over the past month.

Energy markets have remained highly volatile since February 28, when the US and Israel launched their first attacks against Iran, prompting Iranian counterstrikes. Given its critical geopolitical position, maintaining control over the Strait of Hormuz quickly became a top priority for Iran.

Due to the disruptions at the strait as well as the targeting of oil and gas infrastructure in the region, the past month witnessed extreme oil price and supply fluctuations, as well as knock-on effects in related areas like the supply of certain fertilizers. Around 20 million barrels per day (bpd) of oil and petroleum products are affected by transit disruptions, including roughly 15 million bpd of crude oil — a volume larger than US crude production of around 13 million bpd.

The escalating Middle East tensions could mark a turning point for the global energy transition, with many experts warning that international oil prices could be pushed into a dangerously volatile zone, with some regions potentially facing oil supply shortages.

The conflict has caused "monumental disruption" to global energy flows, with markets now pricing in persistent risks to the Strait of Hormuz, Naveen Das, senior crude oil analyst at Kpler, told CGTN.

Simone Tagliapietra, senior fellow at Bruegel, told CMG that the Middle East crisis is putting severe pressure on European natural gas markets. Rising energy costs will squeeze household finances and risk re-igniting an inflation spiral.

Higher energy prices threaten to push consumer prices globally to new highs. In the UK, annual inflation stood at 3% in February, unchanged from January but still well above the Bank of England's 2% target. Eurostat's flash estimate shows euro area annual inflation rose to 1.9% in February 2026, up from 1.7% in January. The European Central Bank has also turned more pessimistic in its economic projections. 

In Asia, experts from NLI Research Institute warn that if the war becomes protracted, Japan's real economic growth could fall by 0.31 percentage points, worsening already persistent inflation. Meanwhile, the OECD has lowered its 2026 growth forecast for the Republic of Korea to 1.7%, a downward revision of 0.4 percentage points.

In Africa, the African Development Bank (AfDB) said on Monday the continent's growth outlook was already tilted to the downside even before the Iran tensions, weighed down by regional instability and global headwinds. Speaking at the launch of the bank's 2026 Africa Macroeconomic Report in Abidjan, Chief Economist Kevin Urama cautioned that the economic impact will depend largely on the duration of the conflict.

Spillover effects from the Iran tensions are also being felt in the US. Some American soybean farmers report sharply rising costs for agricultural inputs, leaving them uncertain about the future of their farms.

Before the outbreak of hostilities in early 2026, the global economy was on a stronger-than-expected trajectory, with forecasts suggesting global growth could be revised up by around 0.3 percentage points for 2026. Those optimistic prospects have now been erased by the conflict.