A surge in global oil prices triggered by the war involving the United States, Israel and Iran is raising alarms about a fresh inflation shock that could ripple through the global economy while hitting vulnerable markets across the Middle East — headlined by Egypt and Turkey.

Crude briefly climbed near $120 per barrel on Monday morning before prices tumbled back to around $90 later in the day after US President Trump said the war was “very complete," but markets remain on edge amid the extreme volatility sparked by the fighting that erupted Feb. 28. Speaking Monday in Tokyo, International Monetary Fund Managing Director Kristalina Georgieva warned that the conflict could undermine the world’s still-fragile economic recovery while advising global policymakers to “think of the unthinkable and prepare for it.” A sustained 10% increase in oil prices, she said, would add roughly 40 basis points to global inflation while reducing global output by 0.1% to 0.2%.

The disruption is being driven largely by the collapse of shipping through the Strait of Hormuz, a vital chokepoint through which roughly 20% of global oil supply and liquefied natural gas trade normally flows. Although regional energy producers stand to benefit from higher prices, nearly all Gulf shipments remain blocked and surging costs are already poised to impact import-dependent nations around the Middle East. 

Details: As economic fallout from the war starts to come into focus, Egypt is among the most exposed. Over the weekend, the Egyptian pound fell to a record low of nearly 53 to the US dollar, and President Abdel Fattah el-Sisi warned last week that the country was facing an economic “state of near-emergency” due to the war, cautioning that the conflict could trigger renewed inflation.

Egypt had only recently begun to tame sky-high inflation, which slowed to 11.9% in January after peaking at 38% in 2023 following a massive international bailout program. A key vulnerability is........

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