Wars in the Middle East and Ukraine Shake the Global Economy and Energy
The wars in the Middle East and Russia-Ukraine created crises in energy lines, supply chains, and food prices, driving up inflation and interest rates.
The war launched by the US and Israel against Iran, alongside the Russia-Ukraine war, has plunged the world economy into a severe deadlock by causing a major crisis in global trade and energy lines. Interruptions in energy supplies and rising costs have fueled global inflation.
Contractions in Energy Markets
While the World Bank expects the average price of Brent crude oil to be $94 per barrel in 2026, global giants have raised their price expectations up to $150. Having surged as high as $126 during the initial period of the war, Brent crude climbed back above $100 in September.
International Energy Agency Warnings
The International Energy Agency predicted that oil flows through the Strait of Hormuz will not return to normal this year, warning that global oil demand could decrease by 2.5 million barrels per day. This situation points to the sharpest annual decline since the 2020 pandemic.
Food Prices and the Agricultural Sector
Attacks on Black Sea ports led to the closure of grain terminals, increasing wheat prices. Meanwhile, the rise in energy and fertilizer costs caused food prices to reach their highest level in nearly four years.
Natural Gas and Winter Concerns in Europe
Natural gas futures in Europe surpassed the level of 80 euros per megawatt-hour for the first time since January 2023. Rising energy costs and the approaching winter season are forcing governments to take measures to alleviate the cost of living.
Monetary Policies of Central Banks
While the European Central Bank raised interest rates following the increase in energy prices, officials signaled further rate hikes to curb inflation. The Bank of England also drew attention to price pressures on consumer goods.
Gasoline and Diesel Record in the US
The average price of diesel across the United States exceeded $6 per gallon for the first time, breaking a record. Rising costs boosted refinery margins, which directly reflected on retail prices and corporate budgets.