---

Energy is often where distant wars first touch ordinary lives. A missile, a blockade or a threat to a shipping route may happen far from home, but its impact can appear quickly in the price of fuel, food and transport. Brent crude crossing $100 per barrel is therefore not just another oil-market headline. It is a warning that the Middle East war is spilling far beyond the battlefield. What started as a regional conflict is now rippling through the global economy, affecting fuel prices, food costs, transport expenses, and the daily financial pressures faced by households.

This is the real danger of the current moment. Wars do not remain where they begin. In an interconnected global economy, a conflict in one region quickly becomes inflation somewhere else. The current crisis shows exactly how that transmission works.

The scale of the disruption is already clear. Around 20 million barrels of oil per day roughly one-fifth of global supply normally passes through the Strait of Hormuz. When conflict threatens this route, even partial disruption shakes the entire global energy system. At one point, shipping traffic through the strait reportedly fell by as much as 90 percent, highlighting how fragile global supply chains can be. The result is immediate. Oil prices surge. Brent crude has crossed $100 and, in some moments, approached or exceeded $110. In earlier phases of the conflict, prices even spiked close to $120 per barrel.This is not just a market reaction. It is the beginning of a wider economic chain.

Oil is different from most commodities because it sits at the center of everything. It powers transport, shipping, agriculture, aviation and manufacturing. It affects fertilizers, plastics, chemicals and food distribution. When oil prices rise, the effect spreads across the economy. The data shows how powerful this transmission is. According to the International Monetary Fund (IMF), every sustained 10 percent increase in oil prices can raise global inflation by about 0.4 percentage points and reduce global output by up to 0.2 percent. This means the current surge is not just pushing up fuel prices. It is slowing the entire global economy. The World Bank now expects energy prices to rise by about 24 percent in 2026 due to the conflict. At the same time, inflation in developing economies could rise to 5.1–5.8 percent, while growth may slow to around 3.6 percent. These are not small adjustments. They represent a broad shift in economic conditions.

The impact on trade is equally serious. Higher oil prices raise shipping and logistics costs, making global trade more expensive. The London School of Economics (LSE) analysis warns that energy shocks, shipping disruptions and uncertainty are already weakening trade flows and slowing growth. This matters because trade depends on predictability. Once costs become volatile, investment decisions slow and global demand weakens.

The shock is also feeding into business costs. Some firms are already reporting increases of around 20 percent in oil-linked inputs, including fuel, chemicals and packaging. This shows how oil inflation spreads into everyday goods, not just energy markets.

Food systems are another major concern. Energy and agriculture are deeply connected. Gas is used to produce fertilizer, and oil powers irrigation, transport and processing. The World Bank expects fertilizer prices to rise by around 31 percent, which could push food prices higher and worsen global food insecurity. 

Humanitarian agencies are already warning of the consequences. Rising fuel costs are disrupting aid delivery, increasing logistics expenses and threatening food supply chains for millions. 

Energy shocks do not affect everyone equally. Wealthier countries can use reserves, subsidies or stronger currencies to absorb some of the impact. Poorer countries and vulnerable households cannot. For them, rising oil prices translate directly into higher food costs, reduced access to services and greater financial stress.

There is also a broader macroeconomic risk. The IMF has warned that in a severe scenario, global growth could fall to around 2.5 percent, while inflation could rise above 5 percent. Some projections suggest that if oil prices remain elevated, the global economy could come close to recession. At the same time, the financial cost of disruption is enormous. Estimates suggest that prolonged instability in the Strait of Hormuz could put between $330 billion and $2.2 trillion of global GDP at risk, depending on how long the conflict continues. 

We have seen this before. The oil shocks of the 1970s reshaped inflation and growth. The 2008 price surge intensified economic instability. The Russia–Ukraine war exposed Europe’s dependence on energy imports. Now the Middle East conflict is repeating the same lesson: energy dependence creates systemic risk. Yet the response remains familiar. Governments focus on short-term fixes releasing reserves, adjusting prices, offering subsidies. These steps may be necessary, but they do not solve the underlying problem. They only manage the symptoms. The real issue is structural. The global economy still relies heavily on a few critical energy routes and fossil fuel supplies that are vulnerable to geopolitical conflict. As long as that dependence remains, every major crisis in an energy-producing region will trigger inflation worldwide.

The solution is not simple, but it is clear. Countries need to diversify energy sources, invest more in renewables, improve efficiency, strengthen supply chains and build strategic reserves. Energy policy can no longer be treated as separate from inflation, trade or economic stability. It sits at the center of all of them. Brent crude above $100 is therefore not just a number. It is a signal. It tells us that the global economy is entering a more fragile phase, where conflict, energy and inflation are tightly connected. A regional war should not determine how much people pay for food, transport or electricity. Yet today, it does. Until that link is weakened, every geopolitical crisis will continue to show up in the same place: the cost of living.And that is the real cost of conflict. 

•    Shurat Rana Rushmi is a Research Associate at Centre for Governance Studies (CGS)

Disclaimer: Views in this article are author’s own and do not necessarily reflect CGS policy