Who hurts most as Iran war hits global economy?

• Japan sources 95% of its oil from the Middle East with nearly 90% traveling through Hormuz Strait; India imports about 90% of its crude oil with roughly half from the affected region
• Gulf economies may shrink this year despite higher oil prices due to inability to export through the effectively closed Strait of Hormuz, particularly impacting Kuwait, Qatar, and Bahrain
• Sri Lanka instituted Wednesday public holidays for state workers, Pakistan raised petrol prices and closed schools for two weeks, while Egypt faces a 9% currency slump and risks losing $20 billion in tourism revenue

Summary: Iran War's Global Economic Impact Analysis

Key Development: Attacks on oil and gas fields triggered fresh energy price spikes on March 20, 2026, as prolonged conflict with Iran threatens unprecedented supply disruptions, particularly through the Strait of Hormuz closure.

Most Vulnerable Economies:

G7 Nations:

• Germany: Manufacturing-heavy economy just emerging from contraction since 2022; limited fiscal capacity despite 2025 stimulus package
• Italy: Large manufacturing sector with highest energy costs among major economies
• Britain: Most reliant on gas-fired electricity in G7; faces potential prolonged high interest rates amid rising unemployment
• Japan: Critically exposed with 95% oil imports from Middle East, 90% through Hormuz Strait; compounded by weak yen inflation

Emerging Markets:

• Gulf States (Kuwait, Qatar, Bahrain): Cannot export hydrocarbons despite high prices due to Hormuz closure; growth forecasts reversed from expansion to contraction
• India: Imports 90% of crude oil, 50% from affected region; rupee hit record lows; gas price surge forcing informal rationing of hot food (samosas, chai)
• Turkey: Sold $23 billion in reserves to support currency; halted interest rate cuts for second time in a year

Crisis-Vulnerable Nations:

• Sri Lanka: Implemented Wednesday public holidays for state workers; suspended non-essential transport; introduced National Fuel Pass rationing
• Pakistan: Ramped petrol prices; closed schools two weeks; halved government fuel allowances
• Egypt: Faces dual threats from energy costs and declining Suez Canal/tourism revenues ($20 billion annually); currency down 9% since war began

Market Impact: Energy shock recalls 2022 Ukraine invasion, risking renewed double-digit inflation across Europe and global economic downturn.