THE IMPACT OF MIDDLE EAST WARS ON GLOBAL TRADE

The Middle East conflict has exerted a multi-layered and severe impact on global trade, primarily reflected in slowing global trade growth, surging energy prices, increased logistics costs, and heightened food security risks.

According to the latest forecast from the World Trade Organization (WTO) in March 2026, global merchandise trade growth is expected to drop sharply from 4.6% in 2025 to 1.9% in 2026 due to energy market volatility and shipping disruptions.

Global Trade Growth Forecasts
If the conflict continues to keep energy prices high, global trade faces further downward pressure:

* Baseline Forecast: Global merchandise trade growth of 1.9% for 2026.
* Risk Scenario: If crude oil and LNG prices remain elevated throughout 2026, growth could fall to 1.4%.
* Buffer Factors: In 2025, trade in AI-related goods surged (up 21.9% YoY), accounting for 42% of global trade growth, which partially offset some geopolitical risks.

Energy Supply Chain & Price Volatility
As the world's "energy heart," conflict in the Middle East leads directly to supply crises:

* Chokepoint Obstruction: Commercial traffic through the Strait of Hormuz is severely compromised, threatening the daily transit of roughly 20 million barrels of crude and 112 billion cubic meters of LNG (from countries like Qatar).
* Price Spikes: In early March 2026, U.S. crude recorded a historic weekly jump of 35.63%, with Brent crude also soaring.
* Infrastructure Damage: Attacks on oil and gas facilities, refineries, and export ports in Iran, Saudi Arabia, and the UAE have forced production and loading operations to a halt.

Shipping Logistics & Transportation Costs
Instability in the Red Sea and Persian Gulf has reshaped global shipping:

* Route Diversion: Shipping giants like Maersk and MSC have rerouted vessels around the Cape of Good Hope (Africa) to avoid conflict zones, leading to longer transit times and stranded capacity.
* Surcharges: Carriers have implemented "Emergency Conflict Surcharges" (ECS), adding $2,000 to $4,000 per container.
* Insurance & Aviation: Regional conflict has led to the cancellation of over 40,000 flights and driven up global shipping insurance premiums.

Food Security & Spillover Effects

* Rising Food Prices: UN agencies warn that the ripple effects of the Middle East situation are driving up global food prices, worsening food security crises.
* Inflationary Pressure: Rising energy and transport costs are being passed to consumers, creating severe cost pressures for global businesses and potentially forcing central banks to tighten monetary policy earlier than planned to combat inflation.