The global economy may be bracing for a longer than expected phase of elevated fuel and fertiliser prices, as geopolitical tensions in West Asia continue to cast a long shadow over energy markets and supply chains. In a joint advisory, the International Monetary Fund (IMF), World Bank, and the International Energy Agency (IEA) signalled that the aftershocks of the ongoing Middle East war could linger, with far reaching consequences.

In Washington, at the first meeting of a newly formed coordination group, the chiefs of three leading global institutions issued a grim warning over the growing economic fallout from the conflict. They said what began as a regional crisis has now snowballed into a global disruption, hitting oil supply chains, squeezing fertiliser availability, raising food security concerns, and threatening jobs across the world.“The impact is substantial, global, and highly asymmetric,” the joint statement noted, underlining how energy importing nationsespeciallylow-income countries are bearing the brunt of rising costs. As oil, gas, and fertiliser prices climb, the ripple effects are being felt across agriculture, manufacturing, and household budgets worldwide.

The main cause of the disruption lies the fragile state of key trade routes, particularly the Strait of Hormuz, a vital artery for global energy supplies. Shipping flows through the passage have yet to fully normalise, keeping markets on edge. Even if transit resumes at pre-conflict levels, officials caution that rebuilding damaged infrastructure and restoring supply chains will take time—prolongingthe period of elevated prices.Beyond commodities, the human and economic toll is mounting. The conflict has displaced populations, disrupted livelihoods, and dealt a blow to sectors like travel and tourism—areas that often take years to recover. For some oil and gas producers in the region, the crisis has also meant a sharp decline in export revenues, highlighting the uneven and complex nature of the fallout.

The institutions cautioned that supply disruptions could lead to shortages of critical inputs, amplifying risks across industries and intensifying concerns around food security. For countries already battling inflation and fiscal pressures, the current scenario presents a difficult balancing act.The high-level meeting came ahead of the release of key global reports, including the IEA’s Oil Market Report and the IMF’s World Economic Outlook, with leaders sharing updated insights into an increasingly uncertain landscape.Reassuringly, the three institutions emphasised close coordination in their response. Teams are working at both global and country levels to provide specific policy guidance, while financial support from the IMF and World Bank is expected to cushion the most vulnerable economies.As the situation continues to evolve, the institutions pledged to closely monitor developments and collaborate with international partners to stabilise markets and support recovery. Yet, the message is clear: the road to normalcy may be longer than anticipated, and the global economy must prepare for sustained pressure on essential commodities.In a world already navigating fragile growth, the enduring impact of the West Asia conflict serves as a stark reminder of how deeply interconnected and vulnerable the global economic system remains.