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Which economies will pay the biggest price for the Iran war?

Financial Times

2 min read

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A hypothetical 2026 Iran conflict would disrupt global oil flows, with China facing the steepest economic fallout due to its heavy reliance on Iranian crude, accounting for 12% of its imports. Europe’s fragile post-Ukraine-war recovery would worsen, as energy prices surge and industrial output stalls, particularly in Germany and Italy, both vulnerable to Middle Eastern supply chain shocks. The U.S. may avoid direct energy shortages but would confront inflation spikes and market volatility, with tech and defense sectors benefiting from increased military spending and energy transition investments. India’s economy, already strained by debt, would see rupee depreciation and higher fuel subsidies, deepening fiscal deficits as it scrambles to secure alternative oil sources from Russia or the Gulf. Smaller Asian economies like South Korea and Japan face dual threats: energy cost hikes and semiconductor supply chain disruptions, amplifying existing geopolitical risks in the Taiwan Strait.

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Source: Financial Times

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