Middle East Conflict: Global Markets Face Renewed Pressure

Commercial traffic through the Strait of Hormuz has sharply declined following missile attacks launched by Iran’s Islamic Revolutionary Guard Corps (IRGC) in response to the deaths of senior Iranian officials, including Ayatollah Ali Khamenei, in a recent US/Israeli military operation.

The disruption to one of the world’s most critical energy chokepoints is adding to existing pressures on global markets, with analysts warning of potential spikes in food prices and broader economic uncertainty. While initial market reactions were volatile, equity, fixed income, currency, and commodities markets have seen fluctuations as investors assess the duration and scope of the conflict.

Beyond energy, the Strait of Hormuz is a vital transit route for fertilizers essential to global agriculture. Disruption could lead to higher farming costs, reduced crop yields, and more expensive food, according to the International Food Policy Research Institute (IFPRI). Qatar, Saudi Arabia, Oman, and Iran collectively supply a substantial portion of the world’s traded urea and phosphates, with nearly all of it moving through the strait.

The immediate impact is expected to be felt most acutely in Gulf countries, but the effects could quickly spread. Industry watchers suggest countries dependent on food imports and fertilizers could face rising costs within weeks, particularly during key planting periods. Sub-Saharan Africa is identified as particularly vulnerable.

Deloitte’s Global Economics Research Center notes that the conflict is already impacting critical global supply chains, and uncertainty will likely remain a defining characteristic of the global economy in the absence of a resolution. The primary transmission channel to markets is currently oil, and a sustained price increase could heighten volatility and pressure existing investment strategies.

Goldman Sachs analysts have indicated that the length of the conflict will be a key factor in determining its broader economic impact, suggesting a longer campaign could contribute to sustained market weakness. Their initial assessment, even though, maintains a base case of robust global growth, acknowledging growing tail risks.

As of March 24, 2026, the United States has emphasized a strategy of regime change alongside military objectives aimed at degrading Iran’s conventional capabilities and preventing the reconstitution of its nuclear program. The IRGC has not publicly signaled any intention to de-escalate, and diplomatic efforts to secure a ceasefire remain stalled.