14 May 2026 - Despite the ceasefire agreed on 8 April, the Middle East conflict that began on 28 February 2026 has already delivered the largest energy supply shock on record. Oil output from the Middle East fell by at least 9 million barrels per day (mbd) in March, against an estimated production of 26 million barrels per day in February, while damage to liquefied natural gas facilities in Qatar is projected to constrain global natural gas supplies for several years.
The closure of the Strait of Hormuz could hold back about 16 mbd of crude oil from the global market and has already disrupted tightly integrated global supply chains, exposing their limited flexibility. These disruptions are driving up production costs and causing shortages of fuels and essential industrial inputs such as naphtha, urea, and helium, delaying the shipment of critical feedstock, and threatening output in fertilizer, plastics, packaging, and related sectors. As existing inventories are drawn down, the options to mitigate the supply shock are also dwindling.
Developing economies are particularly exposed, with demand for refinery products being a critical vulnerability. Many countries—even some that are energy exporting—rely on imported refined fuels derived from Middle Eastern crude. Refinery disruptions at global refinery hubs in Asia, driven by the region’s high dependence on Middle Eastern crude and the need to reconfigure facilities for alternative crude grades, are further constraining fuel supplies across many economies. In East and Southern Africa, where dependence on fuel products derived from Middle Eastern crude oil remains high, supply constraints have persisted, despite ongoing efforts to expand regional refining capacity and diversify supply towards alternative sources, including African crude.
Energy prices have risen sharply and are expected to remain elevated due to tight physical market conditions. Higher fuel costs can rapidly feed into inflation, while fuel and fertilizer subsidies, where implemented, are adding to fiscal pressures. Rising import bills are placing strain on currencies, particularly in countries with limited foreign exchange reserves, thereby amplifying inflation through exchange‑rate pass‑through. Balance‑of‑payments pressures may intensify further if remittances from Middle Eastern countries decline. Although financial stress remains contained globally for now, higher inflation expectations are pushing up global bond yields, increasing borrowing costs and, in some cases, heightening external financing risks. Continued monitoring of these channels will remain essential to assess impacts in the short- and medium-term.
More details are available from the May Monthly Briefing on the World Economic Situation and Prospects.
For the latest update on the global economic outlook, watch the live press briefing on the 2026 Mid-Year Update to the World Economic Situation and Prospects on 19 May 2026,12:45 pm EDT on webtv.un.org.