Energy Conflict Could Reshape Global Growth and Inflation

Northern Trust’s economic commentary evaluates the broader macroeconomic implications of the escalating conflict involving Iran.

• Disruptions in the Strait of Hormuz have triggered a significant energy shock, pushing oil prices higher and raising global shipping and production costs.

• Higher energy prices are likely to slow economic growth while simultaneously lifting inflation, complicating central bank policy across major economies.

• China faces particular exposure due to its reliance on Middle Eastern energy imports, though large strategic reserves may cushion the initial impact.

If the conflict persists, the report suggests that the global economy may face a prolonged period of higher inflation and weaker growth.